Hutch marketing deal likely

Hutch marketing deal likely
Bangkok Post (27 October 2007)

CAT Telecom expects to conclude a marketing deal with Hutchison of Hong Kong for nationwide Hutch mobile phone service within the term of the current military-backed government. A CAT director said yesterday that the board would meet today in Pattaya to discuss the details of the service collaboration with Hutchison.

If the board agreed on the plan, a memorandum of understanding could be signed within two weeks.

At that point, CAT would draft a contract while it awaits a ruling from the Council of State, the government's legal advisory body, on whether the deal needs cabinet approval.

The 1992 public-private joint venture law calls for cabinet approval of ventures worth more than one billion baht in order to encourage transparency.

Under the marketing joint venture, Hutchison would transfer its CDMA 1x network owned by subsidiary BFKT in 25 central provinces to the state telecom enterprise. BFKT would also absorb all the accumulated debt of Hutchison CAT Wireless Multimedia, which is 74% owned by Hutchison and 26% by CAT.

In exchange, Hutch wants to be the sole marketer of CDMA services nationwide, including the network in the 51 provinces where CAT has invested on its own. That network was built by Huawei Technologies of China.

CAT's holding in Hutchison CAT Wireless Multimedia would then increase to 51% from 26% at no extra cost under the deal.

The director said that CAT and Hutchison were hopeful that the deal could be concluded within the term of the current government as they were not certain the next government would approve it.

Hutch now has 800,000 subscribers in a cellular market of close to 48 million.