Thailand Telecom: Key Implications of TRUE-Dtac Merger

AIS, TRUE and Dtac are Thailand’s three biggest telecom operators. With the merger of TRUE and Dtac, the new entity will be the No. 1 operator in terms of subscribers and revenue. While it will be ahead of AIS, the merged entity’s stance on 5G will decide its long-term growth trajectory.

A major objective for the merged behemoth will be to expand into new areas like AI, IoT and cloud computing. For this, it will have to focus on 5G expansion. As AIS is already the first mover in 5G, the merged entity is most likely to pool resources to set up a stronger 5G infrastructure for enterprises and consumers. But this will take time. Two major challenges for TRUE and Dtac here are:

  1. Dtac is yet to receive its 5G licence.
  2. TRUE’s high current debt.

AIS is way ahead of both its competitors on these aspects and it is quite likely that the 5G subscriber base will widen in favour of AIS in the next one year.

Impact on Thailand’s telecom sector

While the two telecom companies are set to merge with equal stakes, they will be running their operations independently till around the second quarter next year. These operations, however, will be run keeping the merger in mind. As both TRUE and Dtac have similar bases, this effort is expected to be comparatively easy. While a price war is unlikely, operators are most likely to step up their efforts to tap into any unsubscribed remainders in the country, especially in Tier 3 and Tier 4 geographies. Based on how the completion of the merger takes place and upcoming efforts from major competitors like AIS, the overall effect on the Thai telecom sector will most likely be felt in H2 2022.

The race for digital transformation, 5G supremacy and Industry 4.0 is likely to get a boost from this merger. Like Globe in the Philippines, which has asserted its dominance on 5G speed and ventured beyond the national borders, it is possible that the big three operators in Thailand will look to at least start with regional partners. It is more likely for AIS to do this faster than TRUE, Dtac or the merged entity. Current transitions in Thai telecom will last longer.

Government’s stance

The Thailand government’s policies on competition are strict. The merger’s potential of crossing the 50% market share mark could spell a complication for it. Both entities might relook at valuations and other specifics or consider making provisions to deal with it differently. Either way, the transition is not likely to go very smoothly. Time will be of the essence and any delays might translate to a shift in subscriber loyalties.

Impact on consumers

 Consumers in Thailand are among the most tech-savvy in the region. They are in a transition towards better networks, clearer signals, 5G smartphones and 5G packages. This is especially true for those residing in the metros and Tier 1 cities. Any inconsistencies in these upcoming trends might not go in favour of Dtac and TRUE. But AIS stands to gain here. Therefore, it is possible to see a certain proportion of subscribers shifting from TRUE and Dtac to AIS. Within those switching operators, an uptick in 5G subscriptions is possible as a fallout.

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Glen is a Senior Research Analyst at Counterpoint Research looking after the smartphone ecosystem in Southeast Asia and the global refurbished smartphone market. He has done his MBA in marketing and joins Counterpoint after a 7-year stint in core market research with global players like Nielsen. He has experience in primary quantitative as well as qualitative research. His expertise lies in the telecommunication and automotive sectors.

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