The IPO of Thai state-run fixed line incumbent TOT Corp looks set to be pushed back to the first quarter of 2006, according to local daily The Nation. The newspaper claims that TOT will have to postpone its plan to list on the Stock Exchange of Thailand before the end of this year unless it wraps up legal disputes with private concessionaires, reduces its regulatory costs and persuades the National Telecommunications Commission (NTC) to make it exempt from telecoms excise tax. TOT currently negotiating with the NTC to reduce its licence fees to THB1 billion a year from over THB5.7 billion, and plans to consult the Finance Ministry to argue its case for not paying the telecoms excise tax that applies to rival private telecom operators. Arguably TOT’s biggest challenge is the prospect of facing as many as seven lawsuits from private operators claiming over the incumbent has overcharged carry their customers’ calls to different networks. The lawsuits have a combined claim value of THB50 billion.
The privatisation of TOT and its state-owned sister company CAT has been a long running saga since the adoption of a new, WTO-compliant telecoms law in late 2001. As long ago as July 2002 the government changed the company’s name to TOT Corporation Public Company Ltd (TOT Corp) in anticipation of a sell-off of part of the operator and flotation on the Stock Exchange of Thailand. The major stumbling block to an IPO of either operator is the state’s reluctance to confirm its loose plans for the merger of both entities. In January 2004 the government confirmed that it planned a TOT-CAT merger, saying it needed to combine the two in order to strengthen them in the face of growing competition. However, it declined to give a timetable and the lack of a conversion scheme has contributed to the problem as both telcos struggle to appraise their assets prior to their respective public listings. The company is keen to complete the sale before the end of 2005 to benefit from favourable tax limits for local investors, which expire at the end of the year, and has appointed Credit Suisse First Boston and Phatra Securities to handle the sale, with Morgan Stanley and SCB Securities acting as underwriters.