True Corporation and DTAC merger lawsuit stirs telecom sector

A recent order from the Supreme Administrative Court may be causing ripples in the telecommunication sector. The court has asked the Central Administrative Court to accept a lawsuit filed by five individuals, aimed at nullifying the National Broadcasting and Telecommunications Commission’s (NBTC) approval of the merger between True Corporation and Total Access Communication (DTAC). However, industry insiders view this order as another regulatory hiccup, rather than a serious threat.

True Corporation released a statement yesterday, March 25, asserting that the Supreme Administrative Court’s decision would not impact the company’s post-merger operations, as the merger had been executed in line with existing legal protocols.

Previously, the lower court had dismissed the lawsuit but this decision was overturned by the Supreme Court. Despite the lawsuit being filed past the deadline, the court deemed it beneficial for the public interest, thereby authorising the lower court to consider the case.

Pisut Ngamvijitwong, a senior analyst at Kasikorn Securities, revealed that a similar lawsuit filed by the Consumer Council had also been accepted by the lower court on the orders of the upper court, back in October of last year. Pisut estimates a time frame of two to three years before the central court delivers a ruling on these lawsuits, with the losing party likely to appeal to the Supreme Court, adding another year or two to the process.

Should the Supreme Court revoke the NBTC resolution, the NBTC is expected to appoint a committee to renew the consideration process, adding another one to two years to the timeline. Any adverse decision against the private operator could trigger further litigation, extending the process by another three to five years.

True’s management, in discussions with Kasikorn Securities, stated that the merger was legally completed on March 1, 2023, with finalisation expected by 2025. Consequently, any retroactive exercise dating back to pre-amalgamation would pose significant legal challenges.

Merger legitimacy

News of the Supreme Court’s overturning of the lower court’s decision might spark concerns about the merger’s legitimacy. However, the protracted nature of legal proceedings implies that outcomes will be years away.

Kasikorn Securities aligns with True’s management, suggesting that the dismantling of the merged entity seems highly unlikely, considering the NBTC’s legitimate authority. The firm believes that the NBTC should find a harmonious solution to appease consumer groups, minimising any negative impact from the issue at present.

Krungsri Capital Securities, meanwhile, maintains a largely untroubled view on investing in True shares, despite the news. It considers the news not new and expects court cases to take time before concluding.

The NBTC board had voted 3:2 in favour of the deal in October 2022, also outlining remedial measures to oversee the merger.

True Corporation stands firm that the case will not hinder the company’s operations as the merger with DTAC has been conducted in compliance with all relevant laws and procedures, akin to past amalgamations in the telecommunications sector.

The company is confident that, as with previous cases where the Administrative Court did not accept similar injunction petitions, the NBTC’s approval of the merger will be found to be legally sound, providing no basis to deem it illegal, reported Bangkok Post.