CAT plans big investment in data and broadband

State telco prepares for life after loss of concession fees

CAT Telecom plans to make a long-term heavy investment on data communications and broadband cellular services and cut costs to seek revenue to offset the looming loss of concession fees.

The State Enterprise Policy Office's committee last week approved the state telecom agency's 2013-2017 strategy for a financial turnaround to cope with the end of its concession.

CAT chief executive officer Kittisak Sriprasert said that the strategy would help the state telecom agency to survive.

The turnaround plan ranges from investment on the expansion of data communications networks to broadband cellular networks, such as the 4G-Long term Evolution technology (LTE) network.

CAT's cellular business concessions granted to Digital Phone Co (DPC) and TrueMove will end this September, while that of Total Access Communication will end in 2018.

Starting in 2014, CAT and TOT will have to pass their concession revenue to the National Broadcasting and Telecommunications Commission (NBTC), which will transfer the funds to the state, as stipulated by the Frequency Allocation Law's Article 84.

Kittisak said CAT's 3G-850 MHz wholesale-resell business had expected total revenue of around Bt25 billion this year. About Bt22 billion of this would be from wholesaling the 3G bandwidth to True Corp's subsidiary Real Move, which has provided the cellular service on TrueMove H brand. The rest will be contributed by CAT's resell of this 3G service by its My brand.

According to CAT estimates, its total revenue this year - excluding concession revenue - would be Bt39.305 billion, with expenses of Bt41.122 billion and EBITDA (Earnings before interest, taxes, depreciation and amortisation) at Bt4.165 billion. If the concession revenue is included, its total revenue this year is estimated at Bt64.954 billion and expenses of Bt55.147 billion. In the first 11 months of last year, its total revenue, including concessions, stood at Bt43.309 billion with net profit of Bt11.325 billion.

CAT and True Corp's group signed a partnership deal in 2011 to provide a 3G-850MHz broadband wireless service. But last June the NBTC ordered them to undertake a joint revision of the contracts so they comply with the frequency allocation law. The revision must show CAT has full management control on its 850MHz spectrum in the partnership.

The state agency also wants to continue to keep its 1,800 MHz spectrum it granted to DPC and TrueMove after their concession expiration. However, the NBTC telecom committee last week approved in principle its subpanel's proposal that the NBTC take back 1,800 MHz from CAT for reallocation. The watchdog has yet to finalise details of the spectrum reclaim.

However, Kittisak said he would ask the Information and Communications Technology Ministry to seek Cabinet approval for CAT to keep the spectrum.

DPC and TrueMove each holds 12.5 MHz bandwidth of the spectrum, which can be utilised to provide 4G service. A telecom analyst has said that if put up for auction, competition for the 1800MHz spectrum would be fiercer than last year's 2.1GHz spectrum auction, given there would only be combined 25MHz bandwidth of 1800MHz available in the auction. The NBTC auctioned a total of 45MHz bandwidth of the 2.1GHz spectrum last year.