Committee flags up illegal amendments to mobile concessions

20 Dec 2010

A review committee appointed by Thailand’s Information and Communications Technology Minister Juti Krairiksh has highlighted various ‘illegal’ amendments to the Build-Transfer-Operate (BTO) concessions issued to mobile operators AIS, DTAC and True Move by state-owned telcos TOT and CAT Telecom, reports the Bangkok Post. In particular the committee has announced that nine amendments made over the years to the contract between cellular market leader Advanced Info Service (AIS) and TOT breach the 1992 Public-Private Joint Venture Law. The law calls for legislative scrutiny of any public-private ventures worth more than THB1 billion (USD34 million), and AIS could theoretically be liable to pay up to THB75 billion in ‘compensation’, after it was singled out because of its previous links to ousted prime minister Thaksin Shinawatra. As part of the Supreme Court’s February 2010 ruling in an assets seizure case against Thaksin it decided that certain amendments of AIS’s BTO concession were illegitimate, alongside excise tax changes by Thaksin’s government that were ruled to favour Shin Corp subsidiaries including AIS. The court concluded that Thaksin had abused his authority to secure changes favourable to Shin Corp, which his family sold to Temasek Holdings of Singapore in 2006.

As reported by the Post, the commission has flagged up concession amendments considered to have breached the 1992 Public Private Joint Venture Law as follows:

Between TOT and AIS:

- Extension of contract term from 20 to 25 years, expiring 30 September 2015;

- Reduction of revenue share on pre-paid service to 20% (from 25%-30%);

- Adjustment of roaming service fee;

- Upgrading of 2G mobile system to 3G using HSPA technology (in the 900MHz band).

Between CAT and DPC (now a wholly owned subsidiary of AIS):

- Allowing DPC to become a full mobile service provider, bypassing requirements under 1992 Law.

Between CAT and DTAC:

- Extension of concession term twice, from 15 years to 22 and then to 27 years, expiring 15 September 2019;

- Upgrading 2G to 3G on existing (850MHz) spectrum using HSPA technology;

- Transferring rights to True Move and DPC to provide mobile phone service.

Between CAT and True Move:

- Allowing True Move to become a full mobile service provider, bypassing requirements under 1992 law;

- Upgrading 2G to 3G on existing (850MHz) spectrum using HSPA technology.

The committee said the government has lost THB55 billion since TOT agreed to reduce the share AIS paid on its pre-paid mobile revenue; when the change was made in the mid-1990s, few people could have predicted that pre-paid customers would account for 90% of the market. The committee added that AIS owes THB20 billion in network roaming fees that it has refused to pay to the state. The Supreme Court had said damages were estimated at THB46 billion for AIS’s five-year concession extension and the reduction of revenue-sharing payments to 20% from 25-30%.

Elsewhere, CAT Telecom has reiterated that its attempt to take over the Hutch-branded CDMA mobile business run by its joint venture with Hong Kong’s Hutchison has failed (due to disagreement on price) and that it has no intention of resuming negotiations. Hutchison CAT Wireless Multimedia, which True Move is shaping up to bid for, has also been accused of operating in defiance of aspects of the 1992 Public-Private Joint Venture Law, although it was not mentioned in the latest disclosure from the state review committee.