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NEWS UPDATES 17 July 2010

Minister wants to end concessions

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The information and communications technology (ICT) minister is backing a Finance Ministry proposal to convert mobile operators' revenue-sharing based concessions to licences despite the risk of legal and political fallout. Juti Krairiksh said he believed Finance Minister Korn Chatikavanij's attempt to convert the concessions to licence-based agreements would level the playing field for all mobile phone operators, the Bangkok Post reports.

Market leader Advanced Info Service (AIS) has five years remaining on its concession with TOT Plc. Second-ranked DTAC has eight years left on its deal with CAT Telecom and True Move three years, also with CAT.

Mr Korn proposes giving all three operators new 15-year licence terms, and having them pay 12.5 percent of their revenue to the state. The revenue-sharing terms of the existing concessions vary and the payments are 25-30 percent.

Mr Juti said the changes would not help to maintain the value of two state telecom enterprises, TOT and CAT Telecom, but also help the private operators.

Though there was a risk of legal disputes, it was the best choice to resolve a long-standing problem that was rooted in unfair practices in the past, he said.

"We have no other choice and we agree with it although the ICT is the industry supervisor and the Finance Ministry is a major shareholder (in TOT and CAT)," Mr Juti said. An industry source said the finance minister wanted to reform the concession system to create fair competition before auctions for potentially lucrative 3G mobile broadband licences are held. He said operators agreeing to conversion would automatically receive 2G licences with the right to develop new services on the existing spectrum.

He said the ministry also wanted the National Telecommunications Commission to fix the 3G licence fee at 12.5 percent of revenue from 6% proposed earlier, to prevent operators from migrating customers from 2G to 3G.

However the source said the NTC made clear that it would not change the licence fee, and also reiterated that only a court could order it to halt a 3G licence auction now planned for September.

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