The ongoing takeover of fixed broadband service 3BB by Advanced Info Service (AIS) may face tough consumer remedies from the telecom regulator because of the dominant position of their combined market share.
Rival True Corporation reported to the Stock Exchange of Thailand that in the first quarter this year it had 3.84 million household subscribers. That figure accounts for 31.5% of the fixed broadband market share, said Pisut Ngamvijitvong, senior equity research analyst at Kasikorn Securities (KS).
True adjusted its guidelines for calculating its fixed broadband customer base from the fourth quarter of 2022. True reported its total fixed broadband subscriber base in the third quarter was 4.9 million, diluted to 3.82 million in the fourth quarter, then rising to 3.84 million by March this year.
True said it removed corporate subscribers from its customer base, while adjusting the calculation to a new standard after it merged with Total Access Communication (DTAC).
According to the KS analysis, there is increasing concern that the National Broadcasting and Telecommunications Commission (NBTC) may enforce tough remedies for consumers on the 3BB-AIS take over deal, given that the combined subscribers of AIS and 3BB would have the largest market share of 37.7%.
AIS's board approved the acquisition of 3BB and a 19% holding in Jasmine Broadband Internet Infrastructure Fund (JASIF) on July 2 last year, proposing the deal to the NBTC for consideration during November and December 2022.
The NBTC appointed subcommittees on May 4 to evaluate the deal and provide an opinion to the board. Following the merger of True and DTAC, the NBTC waited six months after it appointed the subcommittees to vote on the proposal.
Recently the NBTC board approved in principle guidelines for the takeover and investment in JASIF. The owner of 3BB is Triple T Broadband (TTTBB). The guidelines were proposed by NBTC management.
The NBTC office was assigned to appoint four subcommittees to verify details and conditions of the deal.
Mr Pisut said he believes the NBTC will approve AIS's takeover proposals in September, not late June as AIS executive previously predicted.
AIS said the company remains committed to acquiring 3BB and investing in JASIF, even though JASIF shareholders rejected AIS's proposed amendments to optical fibre cable (OFC) rental agreements between TTTBB and JASIF.
The AIS board passed a resolution for its management to proceed with the acquisitions of 3BB shares and JASIF units.
Despite a condition that the deal was subject to approval from JASIF unitholders to cancel the rental assurance agreement and amend the main lease agreement, the AIS board said the transaction was in its long-term interests.
At an extraordinary general meeting (EGM), JASIF unitholders passed a resolution to reject amendments to the OFC lease agreement proposed by AIS.
Regarding a reduced lease fee, which was not approved by JASIF unitholders, AIS said it sees long-term benefits to synergy between the business operations of the companies.
3BB is an established provider of home internet, while AIS is the leader in mobile telecoms and digital services. The acquisition should enable a large reduction in redundant fibre-optic cabling.
Mr Pisut said AIS and JASIF may have to renegotiate the OFC lease agreement in the near future as the risk of 3BB defaulting on its monthly rental payment to JASIF has increased, given that the company breached its financial covenants.
He said KS is increasingly concerned about 3BB's liquidity as it missed its monthly rental fee to JASIF for three consecutive months. Mr Pisut said this issue makes an OFC lease renegotiation likely before the next EGM.
Gulf Energy Development became the second-largest unitholder of JASIF with a 4.25% stake based on the book closing date of May 23. Gulf holds a 41.19% stake in Intouch Holding, the parent company of AIS.
