CAT Telecom hopes to enter a 2G network sharing agreement via a joint venture with Total Access Communication (DTAC) this year as the state telecom firm strives to create a new revenue stream after the end of the concession era.
If the venture agreement gets approved by the cabinet, CAT expects to realise annual revenue of 10 billion baht a year, said CAT president Col Sanpachai Huvanandana.
CAT signed a memorandum of understanding with DTAC in late 2015 to study the possibility of partnering up for the development of a 2G mobile tower after the 2G mobile concession between CAT and DTAC expires in September 2018.
The board of CAT approved the details of the joint venture plan in early 2016. DTAC will have to invest almost 10 billion baht in exchange for a 51% stake in the venture, called Telecom Tower Co.
CAT, meanwhile, is not required to invest in the venture and will own the remaining share.
The network sharing joint venture plan, which also required pre-approval from the Digital Economy and Society (DE) Ministry, has been delayed because of the transition of the DE Ministry from the ICT ministry.
Col Sanpachai said the establishment of Telecom Tower Co is intended to cope with the State Enterprise Policy Commission's (the so-called superboard) policy that urged state enterprises, including CAT, to create new sources of revenue to survive after the expiry of the concession era.
CAT now operates under a survival plan assigned by the superboard.
Col Sanpachai said a joint venture with DTAC is expected to create a sustainable revenue stream for CAT as well as accommodate the government's policy to develop hard infrastructure to enhance the country's digital ecosystem.
Under the joint venture agreement, DTAC will have to transfer all of its existing 13,000 mobile towers and base stations the company installed under a 2G mobile concession contract with CAT.
The value of a mobile tower is estimated at 1-3 million baht.
DTAC has to rent all the mobile towers from CAT to provide mobile service.
The rental rate is initially set at 20,000 baht per tower per month, or 260 million per month.
Col Sanpachai said the venture can provide significant benefits to both parties.
CAT can earn new revenue from the venture while DTAC can ensure there is no potential for disruption to its 2G mobile service after its concession expires.