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Couched as a “merger of equals”, the proposed tie-up of Telenor’s DTAC arm and rival mobile operator TrueMove is anything but, and one unlikely to happen, industry observers predict.

The deal announced Monday would be structured as a share-swap with a ratio of 10.22 True shares for every DTAC share. Once the dust settles, Telenor and True would each hold an equal stake in the combined company.

But that’s where the equality ends. True is Thailand’s second-largest operator, with 32 million mobile customers as of the end the third quarter, while DTAC a distant third with 19.3 million.

Bringing them together would create a new market leader, relegating Advanced Information Systems and its mobile customer base of 43.7 million to second place.

Trailing far, far behind is National Telecom, the state-owned operator formed earlier this year through a merger of CAT Telecom and TOT. According to Bangkok-based analyst firm Yozzo, NT had just under 3.4 million customers at the end of 2020.

It’s also not a merger of equals because it’s also probably not going to happen. And even if it does happen, there is a high likelihood that there would be some stringent conditions attached by the regulator.

Realistically Thailand is a three-player market – NT is a non-factor – consolidating the market to just two firms would have significant implications on competition, especially in Thailand where corruption and lax regulatory enforcement are the norm.

Appearing toothless, the National Broadcasting and Telecommunications Commission already admitted it’s powerless to stop the merger, although Commissioner Prawit Leesathapornwongsa said the agency is concerned about it leading to collusion on service fees and spectrum auctions.

One company operating rival mobile platforms fixing prices and colluding to snatch up available bandwidth? No, that would never happen…

Prawit said the NBTC will consult with the Securities and Exchange Commission  and the Trade Competition Commission about how to deal with the concerns and the new entity that would emerge from the merger.

The problem is that Section 4 of the Trade Competition Act prohibits the TCC from regulating True, DTAC or the merged company, as they are already assigned by law to the NBTC’s jurisdiction.

Sakon Varunyuwatana, chairman of the Trade Competition Commission, said the telecom agency needs to use every tool in its limited toolbox to oversee the merger.

While the NBTC has no authority over either CP Group, the parent of True Move, or DTAC’s owner, Norway’s Telenor, because they are not licensees – DTAC TriNet and True Move H Universal Communication are the licensees – the agency could tie up the merger in regulatory red tape.

And, if the two conglomerates decided to merge their mobile operators, then the NBTC could put the kibosh on the entire deal.

DTAC chief executive Sharad Mehrotra reportedly told the NBTC at a meeting this weekend that the decision whether to merge DTAC and TrueMove likely won’t be made until at least June.

The merging telcos, of course, argue their tie-up would be good for customers. The new megacompany would have the scale and financial muscle to invest in new “Thailand 4.0” technology and maintain low prices.

Norway’s Telenor and True’s parent, CP Group, are planning a “telecom-tech” company and also pledged to form a venture capital group that will raise up to US$200 million to invest in promising startups.

“The telecom and technology sectors are key to enabling Thailand to move up the development curve and to create broad-based prosperity,” said Suphachai Chearavanont, CEO of CP Group and True chairman, in a statement. “As a telecom-tech company, we can help unleash the enormous potential of Thai businesses and digital entrepreneurs as well as attract more of the best and the brightest from around the world to do business in our country.”

Telenor CEO Sigve Brekke echoed those sentiments.

“We have experienced an accelerated digitalization of Asian societies, and as we move forward, both consumers and businesses expect more advanced services and high-quality connectivity,” he said “We believe that the new company can take advantage of this digital shift to support Thailand’s digital leadership role, by taking global technology advancements into attractive services and high-quality products.”

Prawit said a working group will be set up to monitor the potential merger.

Saree Aongsomwang, secretary-general of Thailand’s Consumer Council, said the TCC’s telecom committee will meet to discuss the possible merger, adding that it is concerned, about CP’s monopolistic tendencies, specifically pointing to its recent takeover of Tesco Lotus retailing business in Thailand and Malaysia.

She also urged the NBTC to make clear how it will protect customers of True and DTAC regarding service fees.