True Corp has announced it will push ahead with its (70 billion baht) $2.17 billion infrastructure fund despite concession holder CAT Telecom asking the securities regulator to belay the fund and investigate disputed ownership of assets first.

 

Under the plan True is to package 13,000 towers, 9,000 switches, 45,000 km of fiber and 1.2 million up-country ADSL ports into a public fund and then buy 33% of it back and lease it for up to 15 years.

 

This deal is expected to free up around 52 billion baht ($1.61 billion) in cash to help offset True’s 60 billion baht ($1.85 billion) operating debt out of its 181 billion baht ($5.61 billion) long-term debt.

 

True Corporation CFO Noppadol Dej-Udom said that True had no concerns about CAT’s letter to the Securities Exchange Commission as all the arbitration had concluded a long time ago and that the fund did not include any cell towers or equipment that are under contention.

 

Mr Noppadol also denied that the timing of the infrastructure fund had anything do with True’s 2G BTO concession expiring on 15 September. He said it was because of a government tax incentive that exempted tax for 10 years under such structures and that additional revenue would come from other telcos using the TrueMove and TrueMove H masts and networks for infrastructure sharing.

 

He said that True was confident the securities exchange commission would give the go-ahead and that there was no plan B.

 

However, this statement needs to be taken in context. CAT SE-VP Hansa Chevapurke - who wrote the letter to the SEC seeking postponement of the fund - had explained that CAT had sought arbitration on 4,500 cell sites with a further 3,000 cell sites pending.

 

 

He explained that the arbitrator had dismissed the case, saying that there was no case to be answered as the time for returning the assets had not yet arrived. Hansa said that CAT would be re-submitting the cases to the arbitrator immediately after the concession ends on September 15.

 

The concession is a build-transfer-operate arrangement, and TrueMove has not transferred any towers since the concession began almost 15 years ago.

 

With concession revenue gone, state-owned CAT Telecom will be dependent on leasing fees from networks and infrastructure to survive going forward.

 

Noppadol’s reference to TrueMove H towers will undoubtedly renew debate over the ownership of the 850-MHz network. TrueMove H (RealMove) is on the surface an MVNO under CAT, but CAT in turn outsources its network to True (BFKT) and all major decisions are made by True, not CAT.

 

Thailand Development and Research Institute President Somkiat Tangkitvanich has slammed the 14-year deal as a new concession in all but name, one that was fudged and rushed through to bypass Cabinet and regulatory approval and is currently operating without a licence.