AIS, TOT drop compensation cases over amended contracts

11 Oct 2011

In a statement to the Stock Exchange of Thailand, the country’s largest mobile operator by subscribers, Advanced Info Service (AIS) said yesterday that it has cancelled arbitration proceedings against state-owned telco TOT as the latter has dropped a demand for AIS to pay THB37 billion (USD880 million) in compensation over amended service provision contracts. TOT previously claimed that AIS owed it the amount for lost revenue resulting from amendments to its build-transfer-operate (BTO) network operating concession (issued by TOT to AIS), which were made during the period when the cellco’s founder Thaksin Shinawatra was prime minister. However, as reported by Dow Jones Newswires, TOT retracted its claim, because it had ‘misunderstood’ the facts.

As previously reported in CommsUpdate, in December 2010 a review committee appointed by Thailand’s ICT ministry flagged up BTO concession amendments considered to have breached the 1992 Public Private Joint Venture Law including the reduction of revenue share (payable by AIS to TOT) on pre-paid mobile services to 20% (from the previous level of 25%-30%).

Separately, in May 2011 a government-appointed arbitration panel dismissed TOT’s claim for THB31.5 billion in excise tax from AIS. The excise tax had been introduced in 2003 by the government of Thaksin Shinawatra, imposing levies of 2% and 10% respectively on fixed line and cellular operators, deductable from their BTO concession fees before the remainder was paid to their BTO concession issuers – in the case of AIS, TOT. The tax is estimated to have cost TOT and sister state-run telco CAT almost THB100 billion in lost BTO concession revenues. After Thaksin was ousted in a coup, the new government scrapped the excise tax in 2007.

Thailand, Advanced Info Service (AIS), TOT