TOT seeking USD450 million from True for breach of BTO contract

6 Jun 2005

State-owned incumbent TOT Corp is seeking THB18.35 billion (USD454 million) in damages from privately owned wireline telco True Corp, claiming that the telco violated the terms of their build-transfer-operate (BTO) concession. According to The Bangkok Post, TOT has seven cases before an arbitration court, with two more pending, claiming that True entered into separate business dealings that contravened the terms of the pair’s BTO agreement without seeking TOT’s approval. The arbitration cases include claims that True provided ADSL services without a permit, and failed to share the revenues of its PCT and VoIP services with TOT.

True operates via a 25-year BTO agreement signed with TOT in August 1991 for the provision of local and domestic long-distance services in the Bangkok metropolitan area. Originally obliged to build and operate two million lines, in September 1996 True was given approval for the rollout of an additional 600,000 lines. The following year the telco was granted permission to begin offering value-added services and public telephony, and it now has more than 26,000 public phones in operation in and around Bangkok. Whilst the BTO contract prevents it from adding any more lines to its network, True has focused its energies on developing its high speed internet service and at the end of 2004 the telco had 160,000 accounts and accounted for around 85% of the broadband market at the end of 2004; TOT, meanwhile, ended the year with little more than 10,000 broadband subscribers. The use of BTO agreements in the Thai market is due to come to an end within the next twelve months, under rules agreed as part of the country’s accession to the world Trade Organisation.

Thailand, TOT, True Corp