DTAC

dtac is the second largest mobile operator in Thailand.

Updated: August 2013

In Thailand, Total Access Communication PCL (dtac) was established in 1989. Telenor became a shareholder of dtac in 2001. dtac offers mobile voice, roaming and value-added services to its customers through contract and prepaid tariff plans. dtac was listed on the Stock Exchange of Thailand (the SET) on 22 June 2007 and became the only Thai company listed on both the Singapore Stock Exchange and the SET. As at 31 March 2013, Telenor had a 42.6% non-controlling interest (minority) in dtac. As at 31 March 2013, dtac was the second largest mobile communications provider in Thailand, with an estimated subscription market share of 31.0% or 26.6 million mobile subscriptions. Of these subscriptions, 89% were on prepaid tariff plans. As at 31 March 2013, the mobile penetration (SIM cards) and number of inhabitants in Thailand were 133% and 64 million, respectively.

Network and licences

Currently, dtac operates on 1800 MHz and 850 MHz concessions from CAT Telecom Public Company Limited (CAT) (formerly the Communication Authority of Thailand). The concessions expire in 2018. In addition, dtac (through its wholly owned subsidiary) was awarded an international gateway type three licence in February 2007. DTAC provides 3G HSPA services on its 850 MHz frequency. As at 31 March 2013, dtac had 5,117 3G 850 MHz base stations covering all 77 provinces across Thailand.

On 7 December 2012, dtac’s subsidiary, dtac TriNet (DTN), was granted a spectrum licence for providing cellular mobile phone service on 2.1 GHz band.  The spectrum licence period is 15 years, from 7 December 2012 to 6 December 2027. Under the 2.1 GHz licence conditions, DTN has an obligation to roll out network to cover 50% of the population within 2 years and 80% of the population within 4 years. DTN plans to launch 3G 2.1 GHz services during Q2 2013 under the commercial brand “TriNet”.  With the launch of TriNet, dtac will be the only mobile operator in Thailand which can offer cellular mobile services with the widest combined spectrum bandwidths on 850 MHz, 1800 MHz and 2.1 GHz

Competition

In early 2007, the implementation of interconnection charges reshaped the Thai telecom industry. The operators, after entering into an interconnection agreement, adjusted to the new environment by offering differentiated off- and on-net tariffs. Following implementation of the interconnection agreement, prices have remained fairly stable. As at 31 March 2013, the market leading mobile operator in Thailand was Advanced Info Service plc (AIS), with an estimated subscription market share of 43%. The other mobile operators in Thailand are True Move and Truemove H (following its acquisition of Hutchinson-CAT Wireless Multimedia in 2011), the third largest mobile operator, with a market share of approximately 25%.The other mobile operators in Thailand are small with market shares of less than 1% each, including CAT and TOT Plc (TOT) (formerly “The Telephone Organisation of Thailand”, the state-owned fixed-line operator).

Regulatory matters

dtac has a concession arrangement whereby CAT has granted dtac the right to build, transfer and operate a mobile network in Thailand. In return for the right to provide mobile services for a fixed period, dtac must develop the infrastructure, and then transfer ownership of the infrastructure to CAT and pay a concession fee, or revenue share, to CAT. The revenue share payable to CAT was increased from 20% to 25% in September 2006, and was further increased to 30% in September 2011.

On 17 May 2006, the National Telecommunications Commission (NTC) issued the Notification on Access and Interconnection of Telecommunications Network of 2006 (Notification) applicable to telecommunication licensees with their own telecommunication network, requiring the licensees to interconnect with each other on request. The interconnection provider is entitled to apply an interconnection charge that reflects its costs.

A new interconnection framework for Thailand became effective on 18 May 2006 for all licensed operators and those operating under concessions in Thailand. Due to this change in Thai law as well as its effect on prior agreements, dtac, as well as all other licensed operators in Thailand, made submissions to the NTC Reference Interconnection Offer (RIO), which provides for bilateral negotiations on interconnection prices among fixed-line and mobile operators in Thailand. On 17 November 2006, dtac served notice on TOT and CAT stating that the prior access charge agreements had been amended to reflect the new NTC-approved RIO rates and that dtac was no longer required to pay the rates agreed to under the Access Charge Agreement previously entered into with TOT. Following the submission of the notice to TOT and CAT, the rate to be paid under the Access Charge Agreements was to be either a rate agreed by the parties in accordance with the RIO or an interim rate to be announced by the NTC.

On 16 June 2011, DTAC was notified by the Central Administrative Court that TOT filed a lawsuit on 9 May 2011 and a petition to amend the lawsuit on 7 June 2011 demanding CAT and dtac jointly to pay for damages from the access charge comprising: (i) damages arising from overdue access charges in connection with Postpaid and Prepaid Access Charge Agreements, calculated from 18 November 2006 to 9 May 2011 (the filing date of the lawsuit), including VAT and default interest at the rate of 1.25% per month; and (ii) damages arising from overdue access charges under Postpaid and Prepaid Access Charge Agreements amounting to half of the revenue sharing payment which CAT received from dtac, calculated from 16 September 2006 to 9 May 2011 (the filing date of the lawsuit), including VAT and default interest at the rate of 7.5% per annum. As a result, TOT’s claims against dtac are in aggregate THB 113,319 million (approximately NOK 21 billion). dtac submitted a defence statement on 26 January 2012. As at the date of this Base Prospectus, the case is under consideration by the Central Administrative Court.

In December 2010, the Frequency Allocation Act B.E. 2553 was published in the Royal Gazette, paving the way for the establishment of the National Broadcasting and Telecommunication Commission (NBTC), a new regulator for both telecom and broadcasting industries. The Senate selected 11 members of the NBTC on 5 September 2011, and the selection of the new NBTC members was later endorsed by the King of Thailand on 7 October 2011.

As described in “Network and licences” above, dtac operates under a concession. Its right to operate and deliver mobile services in Thailand was granted by CAT. The concession originally covered a 15 year period, but was later amended on 23 July 1993 and 22 November 1996, with the concession period being extended to 22 and 27 years, respectively. Accordingly, the current concession period will expire in 2018. In February 2011, the Cabinet in Thailand appointed a committee to negotiate with mobile operators regarding amendments to the mobile operators’ concession agreements, alleging that CAT and the Ministry of Information and Technology did not have the required Cabinet approval for the previous amendments. As at the date of this Base Prospectus, the final conclusion of the Cabinet or the way the Cabinet would exercise its discretion on this matter is still unknown to the Telenor Group. However, the Telenor Group believes the amendments were entered into in good faith, that the amendments are legitimate and that the Thai state was not harmed by the amendments.

On 22 September 2011, one of dtac’s minority shareholders (holding 100 shares in DTAC) filed a complaint against the NBTC with the Central Administrative Court, alleging that the NBTC (as an administrative agency) had negligently not performed its duties by allowing dtac to operate a telecom business. Following the filing of this complaint, the Central Administrative Court has issued a summons requesting that dtac be joined as a co-defendant in the case. The Telenor Group management is of the opinion that the Telenor ownership structure in dtac was established, and continues to be, in accordance with Thai law, as well as the established practices in Thailand.

On 12 February 2013, DTAC received a letter from CAT claiming that dtac is in breach of a non-compete provision specified in dtac’s concession agreement with CAT and requesting that dtac rectify such alleged breach. CAT and DTAC have disagreed previously on the correct interpretation of various provisions of the concession agreement, leading to a number of disputes between them. dtac’s management, supported by advice from dtac’s legal counsel, is of the opinion that it is not in violation of the concession agreement in this way, and has explained its position in a formal reply to CAT.

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