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Thailand - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. Progress remains slow with regards to the development of the regulatory regime for Thailand’s telecommunications sector. Liberalisation of the sector, the creation of a new independent regulatory authority, and the privatisation of incumbent operators TOT Corporation (domestic services) and Communications Authority of Thailand (CAT, international, telex, and telegraph services) have all been subject to delay. It was not until December 1999 that the first concrete steps were taken, when the Corporatization Act B.E. 2542 was signed into law to enable the corporatisation of state-owned entities, a prerequisite for privatisation. Further progress was made in March 2000, when the Frequencies Allocation Act B.E. 2543 was passed and the draft Telecommunications Business Act was approved by the Thai cabinet. Both acts made possible the creation of the new regulatory body, the National Telecommunications Commission (NTC). In October 2001, the Thai parliament approved the long-awaited and controversial new telecommunications bill which was to pave the way for deregulation of the country’s telecommunications sector. As the Telecommunications Law of 2002, this legislation provides guidelines for an independent regulator (NTC) and for the changing of the telecommunications industry from a concession-based system to a licence-based system. However, it was not until May 2002 that the Cabinet finally approved the bill, albeit in an amended form which raised the cap on foreign investment in telecommunications companies from 25% to 49%. The new law also enables fixed-line operators to offer pre-paid services, thus enabling them to deal more effectively with endemic fraud and non-payment of bills by customers. Thailand’s telecommunications sector has already been partially liberalised - through the award of concessionary revenue-sharing agreements between private operators and TOT, CAT, and the Mass Communications Organization of Thailand (MCOT, the national broadcasting authority). In 1992, TelecomAsia (renamed True in April 2004) was awarded a 25-year concession to install and operate a two million line telephone network in the Bangkok metropolitan area (BMA). A similar concession was awarded in 1993 to Thai Telephone and Telecommunications (TT&T), for the installation and operation of one million lines in the area outside the BMA. In 1995, the two operators agreed to increase the number of lines to be installed, to 2.6 million by True and 1.5 million by TT&T. Both companies completed their installation programmes ahead of schedule and handed over their lines by the September 30, 1996 deadline. True and TT&T and their affiliates hold concessions to provide other telecommunications services, including personal cordless telephony (PCT) services, although only True currently offers PCT services. Concessions have been awarded by TOT, CAT, and MCOT to a number of private-sector companies for other telecommunications services, notably in the mobile communications sector. Two private operators, Advanced Info Services (AIS) and Total Access Communications (TAC/DTAC), were awarded concessions by TOT and CAT, respectively, in 1990. The auction of third-generation (3G) mobile telecommunications licences has been delayed considerably while the NTC sought to replace the existing regime of concessions with a formal licensing system and the consequent abolition of the complex access charging system in favour of a more transparent interconnection regime which both TOT and CAT had attempted to oppose. The overthrow of the Thaksin Shinawatra-led incumbent government in September 2006 has also resulted in a general slow-down in the passage of new legislation and the adoption of new regulatory tools. Nevertheless, it seems increasingly likely that an auction of an unknown number of 3G licences could finally get underway before the end of 2007. Linked to the 3G issue, however, is the plan to combine TOT and CAT into a new multi-service operator that could be publicly-listed at a later date. This idea was the brainchild of the former Shinawatra regime and may now be reconsidered or at least deferred until a later date. The first step - the corporatisation of TOT - was completed in July 2002, but moves to list the company's shares on the Stock Exchange of Thailand (SET) could not start until the complex process of converting private operators' concessions into licences could be completed; this, of course, required the NTC to be established, the members of which were only appointed - in secrecy - in late-2003 and the organisation itself did not begin operating until the summer of 2004 (it then had to formalise the new licensing regime, a process that did not begin in earnest until late-2005, rendering it somewhat powerless until recently). In the meantime, CAT was corporatised in August 2003; its telecommunications arm became CAT Telecom. In July 2006, it was announced that CAT and TOT had agreed to be managed by a Ministry of Finance-owned holding company as a precursor to a formal merger and likely future public offering of the merged entity. Before that, TOT will acquire CAT Telecom's stake in floundering wireless operator, Thai Mobile, which will be repositioned as Thailand's first 3G operator. It may be that the government will wait on the closure of this transaction before proceeding with a 3G licence auction.
This Market Intelligence Report was produced as part of
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