TOT to follow CAT's lead, eyes venture partners for post-concession projects

TOT president Yongyuth Wattanasin said last week that once all the legal issues over the CAT-True partnership are cleared, TOT would start serious talks with potential partners about developing many telecom projects and providing 2.1GHz wireless broadband service.

Several companies have approached TOT to collaborate on many projects, while TOT and its concession holder AIS are in talks on a possible partnership to provide 2.1GHz service.

AIS’ subsidiary, Advanced Wireless Network, has 15MHz of bandwidth in the 2.1GHz spectrum that is adjacent to TOT’s 2.1GHz range.

AIS’ concession comes to an end in 2015. The Frequency Allocation Act requires both CAT and TOT to transfer all concession revenues to state coffers after three years of the law’s going into effect in December 2010. That prompted the state enterprises to rush to seek other revenue sources. TOT receives about Bt20 billion per year from all its private concession holders, while CAT takes in about Bt18 billion per year.

The CAT-True partnership, which was signed in January 2011, sees True’s subsidiary BFKT (Thailand) leasing its 850MHz network and equipment to CAT and True Group to provide 3G cellular service. CAT has wholesaled this 850MHz bandwidth to True’s subsidiary Real Move to provide the service. CAT also uses the network to serve 100,0000 of its own customers. Revenues for CAT under this partnership are expected to reach Bt25 billion this year.

The partnership deals drew scrutiny by state agencies after they were criticised for not conforming to the Public-Private Joint Venture Act and for breaching the Telecom Business Act because BFKT operates without a licence.

The Council of State recently said this CAT-True partnership was not subject to the Public-Private JV Act. 

The National Broadcasting and Telecommunications Commission (NBTC)’s Telecom Committee ruled in April that the BFKT network rental service to CAT was not a “telecom business” under Article 4(2) of the telecom law. It is also not bound by Article 7 of the same law that requires any company that wants to operate a telecom business to apply for a licence. There is also not enough evidence to prove its guilt and to file a suit against the company.

As ordered by the NBTC, both CAT and True are working together to amend parts of their partnership contracts to make them comply with another of NBTC’s regulations.

Information and Communications Technology Minister Anudith Nakornthap said that if all the legal questions over the CAT-True partnership deals are resolved, the state telecom enterprise could adopt a similar model.

CAT will submit its proposal to the ICT Ministry to spend Bt15 billion on the 3G-850MHz-network expansion project under its partnership with True. The ministry will forward this plan to the Cabinet for approval.

TOT has estimated its gains and losses for five post-concession scenarios. First is the worst case. If it does not seek new revenue, it will suffer a loss of Bt7 billion next year, climbing to Bt17 billion in 2016. 

The second scenario is if the government assigns TOT to develop the Government Information Network (GIN) project next year and offers financial support to TOT. Then TOT will see a loss of Bt2 billion next year. 

The third scenario is if the government assigns TOT to develop the GIN project but without financial support. Then TOT will lose Bt5 billion next year.

The fourth one is the best case. If TOT can achieve 2 million Internet broadband subscribers next year, wins the bid to develop telecom projects under the Universal Service Obligation fund and receives financial support from the NBTC to develop a public Wi-Fi service, then it will earn Bt380 million next year. 

The last scenario is if TOT only achieves 2 million broadband users. Then it will suffer a loss of Bt5 billion next year.