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Dhanin Chearavanont

Dhanin Chearavanont (24): In the right place at the right time to become a telecom giant

After entering the telecom sector, we eventually started selling mobile phones at convenience stores. (Courtesy of CP Group)

Charoen Pokphand Group's three core business lines in Thailand are agriculture and food, retail and telecommunications.

Throughout our history, when CP Group branched out, it was almost always into an area we saw as connected to our mainstay agriculture operations, such as making feed or raising chickens and hogs. Telecom was an exception. It was a sector I hadn't originally intended to get into.

Unexpected entry

Until the 1980s, the state-owned Telephone Organization of Thailand, or TOT, enjoyed a monopoly over the nation's phone service. But lack of competition bred inefficiency, and it would take years between an application for phone service being submitted and the physical line being laid. As a result, few households had their own telephones.

Prime Minister Chatichai Choonhavan, who took office following the general election of 1988, set out to reform the telecom industry. His government wanted to promote the spread of telephones by opening up the sector to foreign players and private domestic companies. Big communications companies from the U.K., Germany, France and elsewhere indicated they were interested in bidding for the rights to provide phone services in Thailand.

There were also expectations that our company would take part in the auction. CP Group and the Siam Cement group, a conglomerate affiliated with the royal family, were seen as the only domestic companies capable of affording the hefty deposit required to place a bid. In the end, Siam Cement opted not to throw its hat in the ring, and CP Group won the concession to provide fixed-line phone services.

Setting up the telephone business wasn't cheap, and we went through many twists and turns, notably having to change foreign partners. Nevertheless, we like to think we contributed to the spread of fixed-line phones in Bangkok through the 1990s. Instead of taking years, phone lines were installed within a week of an application being placed.

This telephone company, True Corp., is now one of our group's core companies.

Unfortunately, we overlooked the mobile communications segment when the government initially put the relevant concessions up for sale. Had we won those rights then, CP Group's mobile communications business likely would have become much stronger, much faster.

It was not until the 2000s that we made our full-fledged entry into the mobile sector. Since then, we have tried to catch up with our two competitors by regularly introducing new services and by keeping our quality high and prices low.

Thanks to these efforts, True is now the only company in Thailand that offers a full range of communications services. Our three-in-one telecom network includes wireless internet, fixed-line internet and broadcast TV. Recently, we won the bidding for licenses to provide 4G (fourth generation) mobile service, which offers faster data speeds and greater capacity. We hope this will allow us to increase our customer numbers and improve the quality of our services.

Initially, I thought the telecom business was unrelated to our main businesses of food and distribution. As it turned out, however, they have produced considerable synergy. At the 7-Eleven convenience stores we operate in Thailand, consumers can purchase not only prepaid SIM cards for True's mobile phone services, but also the handsets themselves. In addition, entering the telecom sector has enabled us to get into the e-commerce and cable TV businesses. 

Bitter lesson

From the latter half of the 1980s through the first half of the 1990s, Thailand's economy posted roughly 10% annual growth, a remarkable performance described by some as "an East Asian miracle." CP Group contributed to this miracle, and in turn, we took advantage of the country's growth to expand our own operations. 

With things looking almost too good to be true, many Thai companies were quick to expand their operations, often ramping up their foreign borrowings to do so. CP Group was no exception. The Asian currency crisis of 1997 would bring home to me how unwise a move this was.

 Dhanin Chearavanont is chairman of the Charoen Pokphand Group.

 

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