6 June 2024

Norway-based Telenor and Thailand’s Charoen Pokphand Group (CP) are exploring a merger of their telecom units in Thailand, which could result in a new market leader in the country, overtaking current number one AIS, which has around a 44% share of the domestic market.

Telenor said, in a statement issued on Friday, that the potential deal would merge the telecom operations of Telenor’s Total Access Communication (Dtac) and CP Group’s True Corporation (True).

Dtac is currently valued at around US$3bn, according to Refinity Eikon data, while True has a value of US$4.5bn.

If approved by Thai regulators, the merger would give the combined entity a domestic market share of around 52%, according to Mads Rosendal, a credit analyst at Danske Bank.

True and Dtac said they have reached out to the Stock Exchange of Thailand (SET) that if a merger is formalised, the regulator will be informed accordingly.

Financial chief of True Yupa Leewongcharoen, said in a brief statement that, if there are any more developments concerning a merger, the company would inform the SET.

The transaction would be in line with Telenor’s strategy of reducing risk and unlocking more value from its Asian business units, Rosendal wrote in a note to clients.

“The potential for higher pricing power and capex synergies from such a deal would be positive, also, in light of recent weak results from Dtac, which still has not recovered to pre-pandemic operating metrics,” he said.

The deal would be Telenor’s second tie-up in Southeast Asia this year, following a June deal with Axiata Group Bhd., to merge mobile operations in Malaysia, in a $15 billion transaction, creating a new market leader there.

Mobile operators are facing pressure on profits in a challenging industry environment and mounting investment costs, as new technologies such as 5G emerge.

CP All, part of CP group, is brand licensee and operator of 7-11 convenience stores in Thailand. The group also took full ownership of the supermarket chain “Tesco Lotus”, now renamed “Lotus’s”, in Thailand in November 2020 and in Malaysia the following month.

reuters, Thai PBS World