Possibility of a potential merger is high. We further investigated the announced  amalgamation of DTAC and TRUE, which we believe should be the sector’s main focus for  2022. Based on interviews with independent analysts as well as industry and regulatory  players, along with a deep dive into the legal issues and history of various telcos mergers  outside of Thailand, we conclude the possibility of a potential merger to be high. Regulation  has been loosening and we believe that the regulator is not against the idea of two  competitors in the sector. We believe regulators can view a merger as creating a more  symmetrical market with enhanced competition and gains for consumers. We expect that  the newly appointed NBTC commissioners would maintain continuity with the existing  government and previous commissioners, which is a positive read-through, in our view.

Industry implications. The amalgamation of DTAC and TRUE will inevitably come with a  mix of remedies, which we believe should promote either the entry or expansion of MVNOs  to preserve some level of competition. At this point, we do not expect a significant change  in the competitive dynamics as literature reviews point to an unclear price effect, and the  challenges MVNOs are facing could remain. Thus, a larger portion of merger benefits will  likely accrue for the merging parties, DTAC and TRUE, in our view.