The amalgamation between True Corporation Public Company Limited (SET: TRUE) and Total Access Communication Public Company Limited (SET: DTAC) is one of the not-so-surprise but big deal in 2022 as two of the top three mobile operators will merge together to unlock their limit and possibilities.
However, the merger will first require a green light from the National Broadcasting and Telecommunications Commission (NBTC), an independent regulatory agency of Thailand, as investors expect to come with conditions by late 3Q or early 4Q.
Maybank Securities (Thailand) (MST) stated that there is 90% probability that the merger will be approved and the merger could be done by the end of 4Q22, while giving “BUY” recommendations for both companies.
MST stated that the potential voluntary tender offer (VTO) price for DTAC of THB47.76/share is 6% higher than the current market price. Meanwhile, the VTO price for TRUE should be THB5.09/share, which is 10% above the current market price. If the merger goes through, investors would reap the upside. The securities company expected the merger to occur by end-FY22E.
“Merger approval could come with conditions,” wrote MST, believing the regulator, NBTC, will implement measures on the merged co to protect consumers’ interests upon approval in 3Q22 (likely in July). MST expected the measures to include price controls and continued operating of both mobile brands, True Move H and dtac, during the first three years. It estimated cost synergies at THB15 billion in FY25E (66:36 from capex:opex) and THB20 billion per annum from FY26E onwards (50:50 from capex:opex).
MST stated that it initiated coverage on DTAC with a BUY and a target price of THB52.00, based on post-merger fair value and 90% probability of the merger being approved. The securities company also initiated coverage on TRUE with a BUY and a target price of THB5.09, based on post-merger fair value and 90% probability of the merger being approved.
