The shareholders of Thailand’s second and third mobile telecom operators by the number of subscribers approved on Monday the merger of their two companies. True Corp. and Total Access Communication (DTAC) await final approval from regulators who must weigh monopoly implications.
True shareholders holding 99.37% of the shares backed the merger at Monday’s annual general meeting. The proposed deal won the support of 89% of shareholders at a DTAC extraordinary general meeting held simultaneously.
Option for shareholders
Those not in favour of the deal can opt to sell their True shares for 5.15 baht a share. For DTAC shareholders, they can sell them at 50.50 baht a share.
True has 32 million subscribers, or 34% of Thailand’s mobile communications market, while DTAC has 19 million, or 20%. Combined, they will leapfrog Advanced Info Service, which has 40.1 million subscribers and become the country’s largest operator. Together, the companies have a market capitalisation of 291.3 billion baht ($8.7 billion) at current share prices.
The two companies say the combined group will be better able to compete in the country’s digital transformation. The companies inform shareholders, it will allocate capital and spectrum to invest in 5G networks and local technology startups.
Thailand regulators not amused
But the deal may face headwinds from the country’s telecoms regulator. Last month, the supervisory board of the National Broadcasting and Telecommunications Commission asked its chair to stop the merger. This action was based on the grounds that it would reduce competition. The Thailand Consumer Council has also warned that higher mobile charges might result from the merger.
Under the terms of the deal approved by shareholders, a new combined entity, currently called NewCo, is expected to list on the Stock Exchange of Thailand in September. Charoen Pokphand Group would hold 28.98% of the combined group after the merger. DTAC’s largest shareholder, Telenor of Norway, would hold 19.64%. China Mobile, which owns just under one-fifth of True, would hold 10.43% of NewCo. Shareholders are strongly backing this.
“The focus will be on technology in order to address demands at a faster pace and add value for consumers and operators of all industries,” said Suphachai Chearavanont, chief executive of CP Group and chairman of True. He added that operating profit would improve after the merger as redundant investments and reducing costs. In conclusion, this action would please shareholders.