Arbitration panel rejects CAT’s DPC tax compensation claim; CAT to appeal

10 Mar 2011

Thailand’s largest cellco by customers, Advanced Info Service (AIS), revealed yesterday that a state arbitration panel has dismissed state-owned CAT Telecom’s claims for an additional THB3.4 billion (USD112.4 million) in compensation for loss of revenue-sharing earnings under the build-transfer-operate (BTO) concession issued by CAT to AIS’ wholly-owned subsidiary Digital Phone Company (DPC). As reported by Dow Jones Newswires, AIS’ CEO Wichian Mektrakarn said in a statement to the Stock Exchange of Thailand that the panel ruled on 1 March that DPC had not breached its agreement with CAT, which had sought THB3.4 billion in additional revenue sharing ‘due to the deduction by DPC of the excise tax from the revenue sharing delivered during 28 January 2003 to 26 February 2007.’ Wichian said the case was dismissed because DPC ‘completely made the payment of the revenue sharing and all debt was therefore paid in full. Therefore, CAT has no right to re-claim for the alleged deficit amount, including the penalty and the value-added tax.’

Staporn Eiadyai, a legal director of CAT Telecom, said the agency would appeal against the ruling within 30 days to the Central Administrative Court, reports the Bangkok Post. In a wider case, CAT claimed it lost THB41 billion when the telecom excise tax was imposed on its three BTO mobile concession holders – Digital Total Access Communication (DTAC), True Move and DPC. It is also pursuing legal action against the Finance Ministry, its major shareholder, seeking THB41 billion, on the basis that the ministry was responsible for carrying out decisions made by the cabinet. The government of ousted prime minister Thaksin Shinawatra in 2003 instituted a 2% excise tax on fixed line services and 10% on mobile services. It allowed operators to deduct the tax from the revenue shares they were to remit to CAT or its sister telco TOT. The Supreme Court subsequently ruled that the excise tax policy had financially weakened TOT and CAT, and the Surayud Chulanont government abolished the taxes in 2007.

Thailand, Advanced Info Service (AIS), CAT Telecom