No TOT-CAT merger plan, says Uttama

No TOT-CAT merger plan, says Uttama

People walk out of CAT Tower in Bangkok's Bang Rak district. CAT and another state-run telecom operator, TOT, have been on survival plans that forced them to cut unprofitable businesses. PANUMAS SANGUANWONG
People walk out of CAT Tower in Bangkok's Bang Rak district. CAT and another state-run telecom operator, TOT, have been on survival plans that forced them to cut unprofitable businesses. PANUMAS SANGUANWONG

There will be no merger between the two state telecom enterprises TOT Plc and CAT Telecom, the Information and Communication Technology (ICT) minister has insisted, citing their different organisational structures and business units.

But the two state enterprises will partly consolidate some of their similar core businesses in order to eliminate duplicate investments and keep up with a changing marketplace, said ICT Minister Uttama Savanayana.

TOT and CAT are operating under a survival plan by focusing on core businesses and terminating their unprofitable business areas.

The State Enterprise Policy Commission or superboard has ordered both companies to restructure their organisations and businesses in order to survive in the post-concession era.

The commission recently approved in principle proposals on the consolidation of three core businesses -- transmission and fibre-optics networks, submarine cable networks, and internet data centres -- submitted by the boards of the two enterprises.

"There will only be three business combinations, with the other core areas [including fixed-line broadband internet, mobile phones and telecom towers and network rental services] remaining untouched," said Mr Uttama.

Both state enterprises will hire telecom industry consultants separately to help facilitate the consolidation process, he said.

TOT and CAT might have to form separate joint ventures to manage and operate the combined businesses.

A resolution on the establishment of joint ventures will be settled by the ICT Minister this year, he said.

Mr Uttama also insisted that the ICT Ministry has no plans to lay off any of the permanent staff of TOT or CAT.

He said both TOT and CAT face a "do-or-die" situation and they must quickly adjust their organisational and business structures in order to survive.

TOT has 15,000 employees, while CAT has almost 6,000.

TOT posted a loss of 480 million baht on consolidated revenue of 12.9 billion baht in the first half of 2016.

The state enterprise expects to face a loss of 4 billion baht this year, a reversal of its earlier prediction of a profit of 4 billion baht.

The anticipated loss is due mainly to delays in settling the partnership deal with Advanced Info Service (AIS) to allow the country's largest mobile operator to provide mobile service on the state telecom enterprise's network, plus an early retirement campaign offering to its 1,300 employees that will cost TOT 3 billion baht this year.

TOT expects to face an operating loss of 1 billion baht for 2016.

TOT earlier projected a gain of 9.5 billion baht in additional revenue from its deal with AIS to provide mobile service on TOT's 2100-megahertz spectrum.

TOT's board approved AIS as a strategic partner to provide mobile service on the spectrum in November last year, but a memorandum of understanding has yet to be signed.

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