CAT gets the cream, but finds it tastes sour

7 Oct 2005

State-owned Thai fixed line operator CAT Telecom says it wants to terminate agreements with three of the country’s mobile operators because new legislation introduced last month means the contracts are no longer financially viable, according to the Bangkok Post. After pressure from CAT and its sister company TOT Corp, regulator the NTC opted not to scrap the contentious build-transfer-operate (BTO) agreements which currently see the nation’s cellular operators utilising the networks of telcos in return for a share of their revenues. Instead the regulator drew up plans to amend the current contracts to reduce the cellcos’ contribution to the costs involved.

Under the new terms, CAT can continue the revenue sharing agreements with TA Orange, DTAC and Digital Phone Company, a subsidiary of Advanced Info Service (AIS), which see it take around 20% of each operator’s annual revenues. However, it must now pay regulatory fees on their behalf. The fees include 3% of pre-expenditure revenues it obtains from the operators, 4% of revenues as a universal service obligation (USO), THB12 per number per month as a numbering fee, and an interconnection fee of THB1.07 per minute on all calls. CAT now says the additional costs mean the agreements are no longer financially viable and it is now asking the NTC to scrap the BTO concessions. ‘The situation for private operators has been reversed from being at a disadvantage to being at an advantage. They can control the game now,’ an unnamed CAT executive told the Post. ‘We found the figures to be shocking. Each concession would put us in the red. We can’t afford to retain them as concessionaires,’ he added.