Thailand - Talks called to resolve problems of unlawful changes to telecoms concessions

[bangkok post] Mobile phone operators should come forward and negotiate with the government to address existing legal errors in their operating concessions, according to Supa Piyajitti, the director-general of the State Enterprise Policy Office (SEPO).

The Finance Ministry has estimated that the government has lost 138 billion baht due to amendments made to concession contracts with private telecom operators over the past decade. Officials argue that the amendments should be voided for failing to follow procedures required under a 1992 law governing joint public-private contracts.

The loss estimates include 87 billion baht in damages suffered by TOT Corp in its concession contract with Advanced Info Service, and the 20.4-billion-baht loss of CAT Telecom in its concession with Total Access Communication (DTAC).

Overall, TOT is estimated to have suffered 87.3 billion baht in losses and CAT Telecom 50.6 billion from the amendments of 10 concessions, including contracts with True, TT&T, Comlink, Jasmine and True Move.

Ms Supa said that in some cases, the amendments were made to accommodate new types of services, such as the emergence of prepaid subscriptions.

For example, TOT agreed in 2001 to reduce to 20% from 25% the revenue share paid by market leader AIS from prepaid calls. Today, nearly 90% of mobile users are on prepaid plans.

The amendments effectively reduced the benefits received by the government, even though calls are carried on networks owned by the state.

Ms Supa said mobile operators should clarify the reasons why payments to the state were reduced, whether due to higher operating costs or other factors.

She said negotiations were preferable to a lengthy court battle. "A court battle to seek damages will take time. A better approach is to negotiate a fair settlement."

Economic ministers last Wednesday agreed to have the Information and Communications Technology Ministry take the lead in amending existing concession contracts to comply with the 1992 joint public-private law. Under Section 22 of the law, the responsible state agency will chair a project committee to conduct hearings into whether past amendments resulted in damage to state interests.

The Council of State, the government's legal advisory body, advised as early as May 2007 that the telecom amendments failed to comply with the 1992 law. It said they failed to be reviewed properly by the responsible project committee before approval by the minister in charge of the agency that was the counterparty to the concession agreement. The 1992 law also requires cabinet approval of any key changes to any contract.

Ms Supa said the ICT Ministry would have 90 days to call a meeting under Section 22 of the law.

Talks urged to address concession errors