A first in the market
Following the Cabinet’s approval on 14 January 2020, a new state enterprise, National Telecom Public Company Limited or “NT”, was formed on 7 January 2021 by a merger of CAT Telecom Public Company Limited (“CAT”) and TOT Public Company Limited (“TOT”). NT has assets worth over THB300 billion in value including over 25,000 telecommunication towers nationwide, spectrum usages, underwater cables, radio frequency, underground conduits, fiber optic cables, 13 data centres across the nation and international telecommunications infrastructure, with more than 17,000 employees.
The merger was implemented through an amalgamation under Section 146 of the Public Companies Act of Thailand as a result of which NT has succeeded and assumed all rights, obligations and liabilities of both CAT and TOT by the operation of law. NT remains to be 100% owned by the Finance Ministry, under the control of the Digital Economy and Society Ministry. While NT’s management decisions are made by its board as in the private sector, except that there are government policies and directions that NT must observe.
This is the first amalgamation of two privatized state-owned enterprises in Thailand, after several attempts initiated about 18 years ago. This being a first in the market, the size and nature of the enterprises, tight timeline, special regulatory regime applicable to state enterprises, resistance from labour unions and level of political support made this a very challenging transaction.
Challenges
This was not a straight-forward process and required assistance and co-operation being provided at the policy level from various governmental authorities. Some of the challenges arose from differences in cultural work practices and policies and redundancy of business operations. It was uncertain throughout its implementation process if the merger would be successful due to various factors including legal and regulatory matters, overlapping business units, issues with the new organization chart, HR related matters and, last but not least, the unprecedented COVID-19 situation.
The most challenging legal issues included, among other things, our dealing with a creditor objecting to the amalgamation through the court process, the succession of various spec-trum usages and telecommunications licenses as well as harmonization of different procurement and other internal rules.
Objectives
The main objectives of the merger are believed to be a survival plan for the previous two state enterprises. The amalgamation should result in long-term improvements, operational efficiencies, employee welfare and enterprise benefit safeguards.
Arkrapol Pichedvanichok
Senior Partner
E: arkrapol.p@mhm-global.com
Chandler MHM
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