THURSDAY, March 28, 2024
nationthailand

Generous bail-out for the private sector

Generous bail-out for the private sector

The government is squandering taxpayers’ money to assist telecom firms and digital TV operators

The Prayut government has unduly but magnanimously rewarded the private sector by approving multibillion-baht debt moratoriums and generous payment terms for costly licence fees currently owed by digital TV broadcasting and telecom companies.
In the broadcasting sector, all 24 digital TV licensees are entitled to apply for shielding under the three-year debt moratorium after encountering financial troubles. During this period, they will be required to pay a relatively low interest rate of 1.5 per cent per annum on the amounts owed to the government. In the telecom sector, AIS and True are the two beneficiaries of the government’s largesse, despite having bid up the prices for the spectrum to be used for cellular mobile services. 
Both packages to help telecom and broadcasting firms need approval by Cabinet as well as National Council for Peace and Order, since the Prime Minister Prayut Chan-o-cha has to exercise his sweeping power under Article 44 of the charter to implement the measures.
The Central Administrative Court earlier ruled that the National Broadcasting and Telecom Commission (NBTC) had failed to fully implement supportive measures during the transition from analog to digital TV, as promised before it took bids for digital TV licences. This resulted in business challenges for those winning the licences, after fewer viewers than expected tuned in to watch the new digital TV channels. As a result, licensees could not generate enough advertising and other revenues to stay afloat during the past two or three years.
The court’s ruling is probably the only sound rationale supporting the government’s measures to help digital TV licensees, though proponents of the aid package have also cited rapid technological changes and an oversupply of digital operators as other key factors hindering the industry.
After all, there is no sound reason for the government to use taxpayers’ money to help private firms that are in trouble because they misjudged the direction of new tech trends, which in this case took the form of rapid adoption of social media and streaming technology.
As to the oversupply of operators, it is also unreasonable to argue that there are too many digital TV channels and competition is too fierce, since all licensees were clearly aware from the outset that there would be at least two dozen newcomers vying for viewers.
However, the aid package for both AIS and True is probably worse in the context that it is not the government’s business to bail out private telecom giants that have made miscalculations in business and investments. Both bid up the licence fees for its spectrum to a record high and ended up owing the government several tens of billion baht. 
Based on an annual interest charge of 1.5 per cent per annum, the telecom giants will gain enormously, since they will be allowed to spread out the payment of their last major instalments of a combined Bt64 billion over a period of five years. True was obviously aware from the beginning what it was doing when bidding for the additional 4G telecom spectrum. For AIS, the situation was slightly different, since it did not win the spectrum but was later encouraged by the NBTC to take it after another bid winner backed out.
And yet, when market interest rates are taken into consideration, the two firms will save an enormous amount of money from the government’s generous aid package.

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