Business

Telenor and CP plan Thailand’s largest telecommunications group through a $8.6 billion merger

Thailand’s Charoen Pokphand and Norway’s Telenor will merge their telecommunications units in the Southeast Asian country in a deal to create the kingdom’s dominant supplier worth more than $8.6 billion. USD.

CP, Thailand’s largest corporation, has substantial presence in the agriculture, food and retail sectors, where the company faced a competitive review for its $10.6 billion acquisition of Tesco stores in Thailand and Malaysia last year.

The proposed relationship between Telenor’s Dtac unit and CP’s True Group comes as telecoms groups across Southeast Asia join forces to deploy 5G infrastructure and reduce investment costs in companies. new technologies such as artificial intelligence and cloud services.

“Margins used to be higher than this, and building 5G and bandwidth will require huge investments,” said Pisut Ngamvijitvong, equity analyst at Kasikorn Securities in Bangkok.

The deal is the latest in the telecommunications sector in the region following Malaysia’s Telenor and Axiata in June. unify their mobile operations in the Southeast Asian country in a $15 billion transaction. In Indonesia, Ooredoo and CK Hutchison in September agreed a $6 billion merger.

CP and Telenor said that if the transaction proceeds, a voluntary tender will be made for all outstanding shares of Dtac and True at a 25% premium over their respective share prices. surname.

CP said the two companies planned to create a new business that would be “a technology company instead of just a telecommunications company”. True and Dtac businesses will be part of this new entity.

“We hope that this initiative can be a significant driving force in promoting Thailand as a technology hub in the region,” the company said.

Jorgen Rostrup, head of Telenor Asia, said the new company intends to raise venture capital with partners worth $100 million – $200 million to invest in digital startups. focuses on new products and services for Thai consumers.

True and Dtac, between them will have more than 51 million postpaid and prepaid users or more than half of the total market in Thailand, a country of 70 million people where rival AIS has more than 43 million users.

Analysts said the merger proposal would likely trigger a regulatory review by the Office of the National Telecommunications and Broadcasting Commission.

“Because this is an important merger, it will have a huge impact on competition and consumers,” said Sarinee Achavanuntakul, an economist and researcher in corporate governance and sustainability. “NBTC should act and say they will use their regulatory powers.”

Follow John Reed on Twitter: @JohnReedwrites

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