CAT eyes Bt19 bn revenue from wholesaling 3G

CAT Telecom expects revenue of about Bt19 billion this year from wholesaling third-generation bandwidth capacity to True Corp's subsidiary Real Move, a huge jump from about Bt1.4 billion last year, the state agency's acting chief executive officer Viroj Tocharoenvanith said.

Of this estimated revenue, about Bt4.37 billion will be CAT's profit.

He said the size of the revenue estimate indicated that CAT's wholesaling of 850-megahertz bandwidth capacity is a promising business.

BFKT (Thailand) has been establishing a 3G cellular network for the agency faster than expected. CAT already has 4,000 base stations and now expects to have 14,000 by the end of this year. Earlier it had anticipated just 5,000 base stations in the first three years of the 3G roll-out deal.

Currently Real Move is the only 3G service provider buying bandwidth capacity from CAT. Last year CAT gained revenue of about Bt1.4 billion from wholesaling 3G bandwidth to Real Move and Bt30 million from retailing its own 3G-850MHz service.

Real Move, which provides 3G service under the TrueMove H brand, targets 4 million customers this year, up from about 700,000.

Others interested

CAT is also in talks with many companies including Loxley, Samart Corp and IEC, which it says are interested in buying its bandwidth capacity to retail 3G service.

CAT officially kicked off its own retail 3G service nationwide last week under the MY brand, aiming at the corporate market, with the goal of acquiring 600,000 subscribers this year, up from about 2,000 currently.

However, its 3G wholesale business still faces a possible legal risk. Several state authorities - the National Broadcasting and Telecommunications Commission (NBTC), the Office of the Auditor-General and the Information and Communications Technology Ministry - have probed the legitimacy of the deals CAT signed with two True Corp subsidiaries, Real Move and Real Future, last January to provide 3G-850MHz service.

The deals saw CAT wholesaling bandwidth capacity to Real Move, while Real Future's subsidiary BFKT (Thailand) procured and installed 3G network equipment for CAT

to generate the bandwidth.

CAT is in urgent need of new revenue sources, given the approaching ends of its cellular concessions. CAT owns the concessions of TrueMove, Digital Phone (DPC) and Total Access Communication (DTAC). The concessions of TrueMove and DPC will end next year, and DTAC's in 2018.

Moreover, the 2010 Frequency Allocation Law obliges CAT and TOT to transfer all their concession revenue to the NBTC three years after the law took effect. The watchdog will pass their concession revenue to state coffers.

Last year CAT made revenue of Bt52.712 billion, of which Bt35.505 billion was from the concessions. Its net profit last year was Bt8.617 billion. If the concession revenue were excluded, CAT would have suffered a net loss of Bt1.776 billion.