  |
 |
 ECONOMY -
Back to Index page Back to Bangkok Post
|
Turtlephone Organisation determines its own paceBureaucratic delayed and old attitudes continue to thwart moves to a modern competitive sector Vivat Prateepchaikul
An apparent obstacle was the conversion of telecom concessions held by private operators, a significant step toward full market liberalisation in 2006. By the end of May, the deadline to sign up for voluntary conversion, 24 private telecom firms holding state telecom concessions had done little more than submit letters of intent to the 11-member concession conversion supervisory subcommittee to have their build-transfer-operate concessions converted. Nine firms refused to convert. The subcommittee is now in the process of selecting a Thai consultant with 10 years experience in finance, accounting and telecommunications to help it consider in detail how to convert each concession . The consultant and the subcommittee had less than six months left from May to negotiate with each concessionaire to turn their revenue-sharing concessions to equity holdings under conditions that will satisfy both the state and the concessionaire. For companies which had signed up for conversion, uncertainty continued to cloud whether they would agree to convert under the conversion framework laid down by the Thailand Development Research Institute (TDRI). Some strongly objected to the way compensation would be paid to the state. The state said compensation payments must start from the time each concession was converted until the expiry of each concession, but the concessionaires argued that compensation payments right through to the expiry of concessions would present a cost burden. They said they would be willing to compensate the state only till 2006, the year when the market is fully opened for international competition, so as to create a fair environment for old and new players. Meanwhile appointments to the seven-member independent regulator to be known as the National Telecommunications Commission (NTC), to ensure smooth and orderly competition when domestic liberalisation starts in October, made no progress. The NTC is to be responsible for regulating the use of spectrum for telecommunications services, granting licences for and regulating telecommunications services, setting telecommunications licensing requirements and procedures, setting standards and technical specifications, setting interconnection principles and processes, and formulating telecommunications tariff structures and services fees. According to the Telecommunications Development Master Plan approved and implemented in November 1997, the NTC was expected to be established by June 2000. Vacancies remaining in the 200-seat Senate were blamed for delay in the establishment of the NTC. Repeated election re-runs for senators called by the Election Commission to screen for ``clean and clear'' senators were cited as the cause.
The 17-member selection committee will comprise representative from each of the Ministries of Education, Defence, Transport and Communications, and Commerce, and the National Security Council. The rest will be professors or instructors in the telecommunications fields of public and private institutions providing courses equivalent to university level, representatives of professional telecommunications computer and electronics organisations registered as juristic persons, and from non-governmental organisations or private organisations registered as juristic persons with consumer protection objectives. During the past six months, there have been several rounds of debate on the qualifications of the selection committee, and intense lobbying from various influential or interested groups hoping to sit on the selection committee just to protect their business interests. So far the selection committee has not been appointed because of concerns over conflicts of interest. However TOT executive vice president Olarn Pientham insisted that the NTC could be formed in August. Privatisation of TOT and CAT Under the Telecommunications Development Master Plan announced in 1997, privatisation of two state enterprises the Telephone Organisation of Thailand and the Communications Authority of Thailand responsible for granting telecom concessions to private operators must be completed prior to domestic competition in October this year. The telecom industry now says that this could never be achieved in time as the two state agencies were still in the process of hiring consultants to help them work on aspects of privatisation such as asset valuation and the status of employees after privatisation. Although both the government and state telecom agencies claim privatisation would have no impact on the status of staff, it has been difficult to convince the staff of this. Tensions are still simmering in the two state enterprises as privatisation looms, and more protests are expected in the second half of the year. TOT and CAT are now waiting for a clearer policy from the Finance Ministry on privatisation rather than just guidelines worked out by TDRI. Some progress was made and this was seen as small steps towards privatisation. One development was that the licensing authorities of both TOT and CAT have been put on hold since March. Now these two state telecoms agencies will perform only supervisory roles. They are no longer allowed to issue telecom licenses or grant further concessions. All licensing authority now has to be referred to the NTC which has yet to be set up. This was necessary to pave the way for a smooth transition and ensure a level playing ground for existing operators and new entrants to compete fairly in the new environment. Further progress was the passage of the Corporatisation Act and its announcement in the Royal Gazette in December last year, and the drafting of the Telecom Service Operations bill by the Council of State. The Corporatisation Act was the first step towards speedy privatisation. Under the act, TOT will be transformed into a TOT Co Ltd, and CAT into a CAT Telecommunications Co Ltd and CAT Postal Co Ltd. The three companies will remain state enterprises under a holding company and all their shares will be held by the Ministry of Finance. As the second step, TOT Co Ltd and CAT Co Ltd will look for strategic partners to hold not more than 25% of shares in each company through international bidding, and also invite private placement to hold not more than 22%, and 3% for staff. The Ministry of Finance will have less than 50% in each company to expedite their transformation to private businesses. TOT has already hired the Arthur Anderson Consulting-Deutsche Bank consortium as its consultant for privatisation. By 2005, TOT plans to list on the Stock Exchange of Thailand and propose an initial public offering. CAT is to begin searching for a partner in 2001, before issuing a stake to private investors in 2002. Fears were also raised at the recent Telecom Forum by telecom industry representatives that the late start by TOT and CAT would put them far behind the rest of the market and make it difficult for them to compete. It was pointed out that globally, telecom companies are in a flurry of mergers and acquisitions, but the two state agencies have moved nowhere. TOT senior executive vice-president Olarn Pientham said the delay was necessary to provide the state agencies with enough time to become more competitive. Olarn said TOT had to complete its transformation to TOT Co by August under the Corporatisation Act. The Ministry of Transport and Communications conducted public hearings on the draft Telecom Service Act before proposing it to the Parliament for approval. The ministry's move was to cool public opposition to the draft act which received cabinet approval after less than an hour of debate, despite it being a most significant bill that directly affects players' and consumers' interests. One of the most contentious points in the draft is that it allows telecom operators to seek new licences after the advent of the telecom regulatory body, the National Telecommunications Commission (NTC), irrespective of whether they are in the telecom concession conversion process or not. Most telecom service providers are not willing to enter the process but were forced to express their intention by the May 31 deadline, though it was clear that it was on a voluntary basis. Huge compensations to be paid in cases of conversion means their gain, but losses to the state were the main reason. Another criticism was that the bill gives too much power to the NTC to supervise market deregulation while having no one to answer to. This makes the whole process too vulnerable to political interference. |
Thailand continued to go slow on the opening of its telecommunications market for domestic competition, scheduled for October this year in line with commitments to the World Trade Organisation.
© Copyright The Post Publishing Public Co., Ltd. 2000
Privacy Policy
For comments and letters to the editor see : notes
Comments to: Webmaster
Advertisng enquiries to Internet Marketing