CAT forges revamped deal with Hutchison

The Nation (6 November 2007)

CAT Telecom and Hong Kong's Hutchison Telecom International have signed a memorandum of understanding to restructure their collaboration in the cellular service business.

The long-awaited move reflects CAT's efforts to improve the operating efficiency of its cellular flagship business.

The state agency posted an operating loss of around Bt657 million during the first nine months, excluding the concession fee contribution and revenue share of Hutchison-CAT. The loss was due to rising overall expenses and the injection of Bt400 million into its early-retirement programme.

Phisal Jorphochaudom, president of CAT, said the agency and Hutchison Telecom had already inked the deal, but he did not specify the date. However, a CAT source said the deal was signed on Friday.

CAT owns 26 per cent of Hutchison-CAT Wireless Multimedia, while Hutchison Telecom holds the rest. The company has marketed the Code Division Multiple Access (CDMA) 2000 1-x cellular service under the Hutch brand and under CAT's marketing contract.

Hutchison-CAT has leased the CDMA network of BFKT in 25 provinces to provide the service. BFKT is a wholly owned subsidiary of Hutchison Telecom.

CAT owns the CDMA network in 51 provinces, which it will soft-launch next month.

Phisal said that under the memorandum of understanding, CAT would become the sole owner of the two networks. BFKT will transfer its network ownership to CAT free of charge, so CAT can merge its own network with that of BFKT.

Then CAT will lease the merged network to Hutchison-CAT to provide the cellular service.

Hutchison-CAT will also apply for a licence to become a mobile-virtual-network operator from the National Telecommunications Commission to provide the service.

CAT will terminate the existing contract it granted to Hutchison-CAT to market the CDMA service via the network in 25 provinces.

The next step, according to the source, is for CAT to increase its stake in Hutchison-CAT to an expected 49 per cent on the cashless transaction.

Since its debut in 2003, Hutchison-CAT has built up to about 800,000 subscribers out of 40 million mobile-phone subscribers nationwide. CAT's CDMA network in 51 provinces currently has 28,000 subscribers after its test-launch of the service early this year.

Marut Buranasetkul, CAT's senior executive vice president, said CAT would use the new brand on the service to be provided by the merged network.

In the meantime, CAT might use the "CAT CDMA" brand first when it soft-launches the service on its own network in 51 provinces next month.

During the first nine months of the year, Hutchison-CAT shared revenue of Bt1.311 billion with CAT. The state agency's total revenue during the period was Bt34.85 billion, with Bt7.058 billion in net profit. Excluding concession fees, revenue will be Bt15.671 billion, with a net profit of Bt461 million.

Revenue from CAT's flagship overseas-call business stands at Bt7.159 billion in the first nine months, down from Bt7.324 billion over the same period last year, while its data communications business's revenue rose to Bt6.055 billion from Bt5.424 billion.

CAT's concession revenue jumped to Bt19.179 billion from Bt7.207 billion.