TOT Plc reached an agreement for Simat Technologies to become its first broadband virtual network operator (BVNO), as it looks to transition as a high-speed wireless data provider.
The state enterprise will sign an agreement with the software and hardware firm today to exclusively provide TOT broadband service in Chiang Mai and Nakhon Ratchasima.
Simat expects up to 15,000 new broadband subscribers within one year of operation, said TOT chief executive Yongyuth Wattanasin.
Under the agreement, Simat will use TOT's fibre-optic network as its backbone infrastructure providing broadband service to end users in both provinces.
A BVNO is a broadband service provider that usually does not have its own network infrastructure.
Mr Yongyuth said TOT will share 30% of the revenue under the service agreement with Simat, with the state taking the remaining 70%.
However, he said Simat is required to invest in some equipment to connect with TOT's core network before distributing to customers.
Mr Yongyuth said TOT expects an additional 200,000 broadband subscribers this year, up from 1.4 million.
The enterprise's broadband revenue accounted for 31% of its total income.
He added TOT plans to appoint three more firms to become BVNOs, likely in Chon Buri, Phuket and Udon Thani.
Mr Yongyuth admitted TOT desperately needed to maximise its existing businesses, especially 3G mobile phone and broadband services, to offset vanishing concession revenues. TOT earns about 20 billion baht per year in concession revenue from Advanced Info Service, but that concession is due to expire in 2015.
In addition, TOT will not be able to book all concession-related revenue on its financial statement as its own after Dec 20. Under the 2010 Frequency Allocation Act, state enterprises must pass their concession revenues to the state coffers.
Last year TOT reported a net profit of 6 billion baht, but without the concession revenue it would have slid into the red because of high operating costs and expenditures.
Mr Yongyuth said TOT is drafting a 3G network investment plan for the second phase as it plans to install 13,000 to 15,000 more 3G base stations.
About the author
- Writer: Komsan Tortermvasana
Position: Senior Business Reporter