Thailand Telecom : Positive sign regarding Court ruling on CAT labor union petition

News: According to Krungthep Thurakij, the Administrative Court will announce today (postponed from yesterday) whether the Court will accept a petition filed by CAT’s labor union against the 3G auction. However, the Court stated that an emergency protection ruling would not happen as the auction has not yet taken place and no damage has occurred.


Comment:

? The preliminary comments from the Court are positive for the sector, implying that the risk of the 3G auction being suspended is minimal.

? In addition, the chance that the Court will dismiss the petition of the labor union is high given that the labor union itself is not considered a party directly impacted by the auction. Earlier, the Court rejected several lawsuits filed by TOT’s labor union.

? Lawsuits from parties that would be directly impacted, like CAT Telecom and the TOT, appear unlikely. There is still no progress from the CAT/TOT sides. Objections from both state telecom enterprises have diminished as the government, the major shareholder of both firms, has shown its support for the upcoming auction.


Recommendation: This should reaffirm the viability of the 3G auction on 20-28 Sep. We maintain our Trading Buy recommendation for both ADVANC (TP of Bt110/sh) and DTAC (TP of Bt60/sh). In the near term, despite less upside to the target price, ADVANC appears attractive to us for two reasons (1) the highest possibility of securing one license (2) its underperformance of 15% compared to the SET and 17% to DTAC.