True Corporation

True Corporation Plc (TRUE) 
 

What’s new? Mr Methee Krongkaew, chairman of the NACC’s investigation committee looking into the 3G-HSPA contracts between CAT and TRUE for bandwidth that had previously been used by Hutch, said the inquiry had found irregularities. No names of individuals have been disclosed yet.
The individuals suspected of breaching laws will have 15 days after being informed of the allegations to make their cases to the investigation committee. Following depositions from the individuals, the investigation report will be forwarded to the NACC, which will decide whether to recommend litigation to the Office of the Attorney-General.
In a related development, Mr Kittisak Sriprasert, CAT CEO, said that the board of directors decided to submit the 3G-HSPA contracts between CAT and TRUE to the Council of the State for an opinion on their legality.
In line with expectations: As we expected, the NACC investigation found irregularities in the CAT-TRUE deal over the former Hutch bandwidth. We expect the NACC to recommend litigation. We assume that such a case would be filed to the Supreme Court’s Division for Holders of Public Office. If the court were to agree to hear the case, its verdict would be final. 
Action: This news is clearly negative for TRUE. Under the worst-case scenario its deal with CAT would be abrogated and it would lose right-of-use to the 10MHz x2 of 800MHz bandwidth. Note that the NBTC is also investigating the CAT-TRUE contracts for the Hutch bandwidth. Our HOLD rating stands.