DTAC vs CAT round 1

16 May 2011

The first volley of shots between DTAC and its concession holder-cum-competitor CAT Telecom have been fired and it is not looking too good for CAT’s CEO.

On 27 January, CAT and True signed an agreement that would allow True to build (through BKFT, now part of True) and sell (through RealMove, a new company owned by True) HSPA 3G services on the 850 MHz band.

DTAC filed a lawsuit with the Administrative Court on April 25 and asked for an injunction to halt the deal on the grounds that the deal was illegal on two key counts. Firstly, that the deal, a de-facto concession through the back door, should have been subjected to the Public-Private Joint Venture Act and secondly, that by subcontracting both network and commercial operations to True it violates Article 46 of the Frequency Allocation Act that requires a license holder to operate spectrum itself.

The Administrative court is an investigative court. If a plaintiff has some evidence of wrongdoing of a government official (and state owned CAT Telecom is under this court’s jurisdiction), the court can take on the the case and it will be up to the judge, not the plaintiff, to investigate and come up with proof.

The CEO of CAT Telecom, Jirayut Rungsrithong seemed reluctant to answer questions according to detailed accounts run in the local media. Asked why the contract was not put through the Public Private Joint Venture procedure, Jirayut said that the resale side (with True as RealMove) was just a resale agreement while the network side (with True as BFKT) was just an equipment leasing contract, not quite answering the question.

Asked why the court should deny an injunction, CAT cited huge monetary damages (10 billion baht) and disruption of services and breakage of universal service obligations, going so far as saying that the 1.2 million current Hutch CDMA subscribers would be cut off and left without service.

DTAC responded that none of that had anything to do with the fact that the takeover deal was illegal and violated the two laws.
One interesting iota of information gleamed from the hearing was CAT’s insistence that the 1.2 million Hutch subscribers would be affected as the old contract with Hutch was nullified on 27 January, leaving nothing to fall back on. If an injunction were granted, the existing network would have to be turned off.

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