Looking to Thailand for growth

01 Feb 2006

As the biggest fish in a shrinking pond, Taiwan's Chunghwa Telecom is looking for opportunities in international waters. One such opportunity to reach beyond its overcrowded home market is its relationship with TOT Public Company, the largest telephone company in Thailand.

TOT and Chunghwa have cemented their ties in the past year as Chunghwa fulfilled a contract to provide TOT with an ADSL network in Chiangmai on a trial basis. That contract will be extended and expanded with an agreement for Chunghwa to build a larger ADSL network for TOT later this year.

By expanding its position in Thailand, Chunghwa hopes to gain its first foothold in an overseas market, and may even seek to own a piece of TOT in May when 30% of the company's shares are slated to be sold to the public.

'Chunghwa does not rule out the possibility of buying a stake or investing in TOT,' Chunghwa's chairman Ho Chen Tan told reporters last month. But while not ruling the possibility out, he is playing it down, at least for now.

'Chunghwa Telecom has not had any discussions with TOT in terms of investing in the company. What we are looking at right now is the business opportunity of building up telecom networks in Thailand,' said the chairman.

While Chunghwa may be the biggest fish, Taiwan's other operators are also finding the local fishbowl to be rather crowded. Daniel Tsai, chairman of Taiwan Cellular, said last month that his company is actively searching for an overseas investment, without providing further specifics.

With a saturation level approaching two mobile phone numbers for every person on the island, Chunghwa and its competitors have a common inclination to seek more prospects for earnings growth overseas.

Thailand's saturation level is the opposite of Taiwan's, with about two people for every phone, and a broadband penetration of just 1%, so it seems an ideal starting point for Chunghwa's overseas ambitions.

Chunghwa isn't the only telecom operator expressing an interest in Thailand. The market's potential for growth and recent telecom liberalization have combined to spark the exploratory interest of companies like O2, BT, Vodafone, DoCoMo, and others from China, Taiwan, Singapore and Australia, according to Thai Press Reports.

But Thailand may hold more importance for Chunghwa as a first stepping stone in establishing a global presence. According to the company, Chunghwa Telecom now has only one office overseas, its representative office in Bangkok.

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