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9 December 2014
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State urged to cut TOT, CAT stakes

Komsan Tortermvasana

Dilution would help ailing enterprises

The Finance Ministry should reduce its shareholding stake in the two state telecoms and allow participation by private ones, says the Thailand Development Research Institute (TDRI).

TOT Plc and CAT Telecom are wholly owned by the ministry.

“The Finance Ministry stake in both TOT and CAT should be limited to a maximum of 51% in order to end the tradition of political intervention in the financially ailing state enterprises,” TDRI chairman Somkiat Tangkitvanich said.

He said state dilution would open the door to private telecoms, both local and foreign, to help the state enterprises revive their flagging fortunes.

The arrival of new players would also create a new way of playing the game.

“Any wholly owned state enterprise has already proved a failure when it cannot create a sustainable business model,” Mr Somkiat said.

He pointed to the lack of business continuity brought about by frequent changes in the board of directors and management at TOT and CAT.

In addition, many executives of the state agencies were promoted as a result of hidden agendas and to serve politicians’ interests.

Mr Somkiat is opposed to the idea of merging TOT and CAT, saying it would not resolve their ailing financial status.

TOT and CAT are operating under a survival plan.

The State Enterprises Policy Commission or superboard has ordered both of them to terminate their unprofitable businesses and focus on six core areas instead.

They are basic telecommunications infrastructure, telecom towers, wireless broadband service, fixed-line broadband, international internet gateways and submarine cables.

TOT is bracing for an operating loss of 4.57 billion baht this year, better than an earlier forecast of 8 billion thanks to improved cost management.

The company expects revenue of 32 billion baht this year.

CAT envisions a net profit of 1 billion baht on revenue of 49.7 billion this year.

TOT and CAT have not been able to book any revenue related to concessions since last Dec 20.

The Frequency Allocation Act requires state companies to pass such revenue directly to state coffers.

Mr Somkiat is a supporter of the government’s digital economy initiative as a means to push Thailand towards an internet-based economy.

But he said TOT and CAT should not be assigned major roles in handling and managing the planned national broadband project if the state wanted to get the project off the ground.



First published: Bangkok Post, December 6, 2014