Orange announces exit strategy from Thai market

9 Mar 2004

Orange, the mobile business of France Télécom, has announced plans to exit the Thai market beginning with the sale of the majority of its stake in local cellco TA Orange to Bangkok’s major wireline operator TelecomAsia Corp. Orange has all but written off making a return on the USD550 million it paid for its 49% holding in TA Orange in 2001 and will sell 39% of the cellco to TelecomAsia for the nominal price of THB1. Orange will retain a 10% stake and allow the operator to continue using its brand name for three years. The French group’s decision follows TA Orange’s posting of an eight-fold increase in losses for 2003, whilst its 8% market share is way below Orange’s self-set benchmark that all of its subsidiaries should control at least 20% of their market. TA Orange lags in third place in the Thai mobile sector, some way behind market leader Advanced Info Services (AIS) and second-placed operator Digital Total Access Communications (DTAC).

Following a soft launch in November 2001, TA Orange introduced full commercial operations in Bangkok and its environs in March 2002. The operator was instantly playing catch up to both AIS and DTAC, whose own GSM networks had both been up and running since 1994. Additionally, TA Orange’s coverage was initially limited to around 40% of the population and it wasn’t until the end of 2002 that the cellco finished rolling out its network nationwide. Last month TA Orange revealed plans to issue new shares to fund network expansion in a bid to raise its capital expenditure for 2004. The company’s CEO Supachai Chearavanont said that it would also invest between THB5 million and THB6 million (USD128 million – USD154 million) from cash flow on expanding its network this year. At the time the company said that it hopes to record its first net profit in 2005; clearly Orange has decided that 2005 is just too far away.

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