[bangkok post] The government is embarking on an overhaul of the troublesome mobile phone concession regime, with the recent pact between True Corp and CAT Telecom seen as a model for restructuring the industry.
Officials have also been in talks with SK Telecom of South Korea and NTT DoCoMo of Japan to carry Advanced Info Service's mobile business in the worst-case scenario of the top-ranked operator failing to pay 74 billion baht compensation demanded by TOT Plc for damages resulting from changes to past contracts, a government source said.
The source said the overhaul was aimed at resolving the chronic problems impeding industry development, notably the inability to offer 3G wireless broadband service at a time when most other countries offer it and many are now preparing to launch 4G.
The present problems are rooted in a series of amendments _ some of them dating back as far as 15 years _ made to concessions between major operators and the two state telecom enterprises, TOT and CAT Telecom.
The Council of State, the government's legal adviser, concluded in 2007 that many of the changes, such as contract extensions and revisions in revenue-sharing terms, breached the 1992 Public-Private Joint Venture Act.
The Act requires special scrutiny of agreements for ventures worth one billion baht or more, with cabinet approval in some cases.
An investigative committee looking into all of the amendments forwarded its recommendations to the Information and Communications Technology Ministry.
The ministry last week opened talks with the private operators and state telecoms in an attempt to arrive at compensation figures.
The ICT Ministry committee overseeing the talks has asked the operators to propose a compensation formula by Friday.
The final compensation payment would not necessarily be the same as that proposed by the investigative committee or claimed by the state telecoms, said the government source, who has been part of a team looking into industry reform for the past three months.
"Compensation could be settled between the state telecoms and operators," he said.
"The payments could be spread over 15 to 20 years to ease the financial burden on operators."
TOT wants AIS to pay it 74 billion baht, including 40 billion in losses from the reduction of prepaid revenue-sharing.
For CAT, it is estimated that amendments for second-ranked mobile phone operator DTAC cost the state enterprise more than 20 billion baht, True Move 6billion and Digital Phone Co 3 billion to 4 billion baht.
The source said the reform plan was intended to solve private companies' problems and also help TOT and CAT survive as viable businesses in the future. They presently depend heavily on concession revenue payments.
"For a way out, we are looking to demand that private operators compensate
[TOT and CAT] for losses from past concession amendments, to end the old concession system and shift to a new business model," he said.
The source said that if the state enterprises and private operators failed to negotiate payments, the issue would go to the cabinet.
Another option is to take the case to the Civil Court, which would decide whether to accept it or recommend arbitration.
The study team has outlined a plan to draft a new contract model based on a wholesale-resale agreement, under National Telecommunications Commission regulations.
The source acknowledged that True Move was seen as a test case because of the urgency of its situation.
Its concession is due to end in 2013, while AIS's concession will end in 2015 and DTAC's in 2018.
When True acquired the small Hutch mobile business, in which CAT was also a partner, an opportunity arose for True and CAT to draw up a new working arrangement, resulting in a 3G service wholesale-resale contract lasting 14 years.
The source said top executives of the three major mobile operators had acknowledged the government's intentions. If they agreed with the plan, they would have to return their frequency rights to CAT and TOT.
They would then enter rental contracts to use the state telecoms' equipment and networks under new business conditions.
True-CAT model is a wake-up call