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Hutchison Telecommunications International Ltd gives consent to vend its stake in a Thai mobile joint venture, Hutchison-CAT Wireless Multimedia, to local partner CAT Telecom. CAT’s President Phisal Jorpocha-udom has confirmed the news. No financial details have been disclosed yet. Hutchison Telecom owns 75 pct of the joint venture, with the remaining 25 pct held by CAT. In 25 Thai provinces, Hutchison-CAT Wireless Multimedia offers a Code Division Multiple Access (CDMA) 2000 1x cellular service with more than one million subscribers.

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Thailand’s second largest cellco by subscribers, DTAC, said yesterday that it will likely have to delay 3G services until 2009 because of regulatory issues. DTAC has formed a loose alliance with CAT Telecom for the development of 3G on its existing 850Mhz frequency, but the cellco is waiting for the state firm’s board to give the green light to the project. ‘We have been waiting a long time for CAT’s board to approve this,’ said DTAC chief commercial officer Thana Thienachariya. ‘We hope we should be able to do it within nine to twelve months after we receive approval from CAT and the regulator.’ He added that he was unable to provide any reasons for CAT’s delay. CAT executives have so far refused to provide any explanation.

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Hutchison Telecom International has announced it will take an impairment charge of HKD 3.854 billion in its full-year 2007 results to write down the value of its Thai mobile operations. It will also realise a tax credit from the operations of HKD 421 million. As a result of the charges, the company expects to report a loss from continuing operations for the year. Hutchison warned already last year of pressure on prices at its Thai subsidiary due to intense competition on the market. Its mobile service Hutch CAT is run in a joint venture with local operator CAT Telecom.

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Alcatel-Lucent of France has expressed strong interest in entering a venture with Thai Mobile for the country’s first 3G cellular service based on a government-to-government model.

The telecom equipment supplier said that the Chinese government had already given the green light to Alcatel Shanghai Bell, the flagship of Alcatel-Lucent in the Asia Pacific region, to participate with Thai Mobile.

Alcatel Shanghai Bell is 50% owned by the Chinese government.

“We are in discussions with TOT on a possible venture with Thai Mobile in areas of financing support, potential 3G technologies and a future business model,” said Yuan Xin, the chairman of Alcatel Shanghai Bell, said recently in Bangkok. “We are very interested and willing to be a strategic partner with Thai Mobile to start up 3G service in the face of technology transition.”

Thai Mobile is a joint venture between Thailand’s two state telecom agencies, TOT and CAT Telecom. It is currently the only operator using 1900Mhz, a global 3G cellular technology platform. The now defunct Frequency Allocation Committee set aside the spectrum for Thai Mobile before the National Telecommunications Commission (NTC) was established as the industry regulator three years ago.

The spectrum is the most valuable asset of Thai Mobile, which has otherwise failed to establish a presence in the local cellular market. It has only around 70,000 customers out of 42 million mobile users nationwide.

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Thai Mobile is moving closer to becoming the first 3G service operator with two European telecom operators and investment funds from China and Russia interested in helping start the broadband cellular service and provide long-term loans. Djit Laowattana, a TOT board director and spokesperson, disclosed after a meeting yesterday that England’s Vodafone and France’s Alcatel had shown interest in helping construct the network for Thai Mobile with their 3G technologies.

Investment funds from China and Russia would extend long-term loans for Thai Mobile to start up the third generation cellular services.

Thai Mobile is a joint venture between TOT (58%) and CAT Telecom (42%). It is the only operator using 1900 megahertz, a global 3G cellular-technology platform. The now defunct Frequency Allocation Committee set aside the spectrum for Thai Mobile before the National Telecommunications Commission was established three years ago.

He said that Alcatel scheduled a meeting with TOT to propose its 3G technology on Friday.

He disclosed that at the first meeting of TOT’s 3G committee, it considered using about 17.38 billion baht to migrate the existing 2G service of Thai Mobile to 3G in three phases.

The migration, he said, pinned hope on Advanced Info Service and DTAC using its 3G network and helping with innovation services.

He said Phase I would involve investing around 1.4 billion baht to upgrade the existing 533 base stations and core network from GSM to WCDMA or 3G technology.

The second phase would use 15.5 billion baht for nationwide investment, and the last phase would need another 400 million baht for six major provinces in Nakhon Ratchasima, Khon Kaen, Chiang Mai, Phuket, Nakhon Sawan and Surat Thani.

The holding structure of the 3G network would be the same with ACT Mobile as the network owner, while Thai Mobile would rent the network to operate.

But he said that TOT was in the process of buying CAT’s stake in Thai Mobile at 2.4 billion baht, a deal which has yet to be settled.

He said that while the 3G committee was in favour of 3G networks, private operators showed little interest in investing by themselves due to low margins.

He said TOT wanted help from local operators as partners to help manage and develop services.

However, he said that there was no settlement yet on the proposals, but that the situation could become clearer within the next three months before the general elections at the end of the year.

But Sigve Brekke, the chief executive of DTAC, said that his company had never expressed interest in using Thai Mobile’s 3G network service.

The TOT board however had expressed interest in attracting private operators to use the Thai Mobile network, and had approached DTAC with the concept three months ago. But no direct talks with Thai Mobile had been held to date, Mr Brekke said.

He added that DTAC planned to build its own 3G network and would rather allow Thai Mobile to use its facilities instead.

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Thai regulator the National Telecommunications Commission (NTC) has ordered incumbent fixed line operator TOT to start negotiating network access charges with mobile operator DTAC or risk penalties ranging from fines to the loss of its licences. Yesterday was the deadline the regulator had set for TOT to start talking with DTAC but the state-owned telco has apparently still not responded to requests to discuss the months-old dispute. DTAC, which holds a build-transfer-operate (BTO) concession from TOT’s sister company CAT Telecom, previously petitioned the Administrative Court for emergency protection after TOT threatened to block access to its network for three million new DTAC mobile phone numbers. Fellow privately-owned cellco True Move, also a CAT concessionaire, sought similar protection. DTAC and True Move stopped paying access charges to TOT in November last year, arguing that they should pay cost-based interconnection charges instead, to comply with new NTC rules. TOT last year earned access charge revenues of THB14 billion (USD450 million).

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The Bangkok Post reports that a protracted dispute appears to be nearing a climax with a decision by state-run CAT Telecom to pay network access charges to fellow government-owned fixed line operator TOT, and in turn sue True Move and DTAC, the two mobile operators that hold Build-Transfer-Operate (BTO) licences with CAT, for THB4.8 billion (USD150 million) in compensation. DTAC and True Move stopped paying network access charges to TOT in November last year, arguing that the new system of interconnection rates approved by the National Telecommunications Commission (NTC) should take precedence. TOT claims it is owed THB6 billion, and CAT has agreed to pay a first installment of THB2.4 billion on its mobile concessionaries’ behalf. However, in a further twist, an unnamed TOT executive said the payment would not be in cash, but that CAT would instead transfer its 42% equity stake in Thai Mobile, the struggling cellular joint venture between TOT and CAT. The stake has been valued at around THB2.4 billion. TOT had earlier offered to buy the shares to make it the sole owner of Thai Mobile, in the hope of reviving the business, which has debts of around THB6 billion.

The newspaper reports that the Ministry of Information & Communication Technology has given CAT the green light to take DTAC and True Move to the Civil Court. Under the terms of the original BTO concessions, CAT believes that it can seek compensation worth double the amount of access charges it has to pay. TOT, meanwhile, continues to insist that it should be allowed to collect access charges for the mobile operators’ use of its network, and regards access charges as a separate issue. The incumbent earned around THB14 billion last year from access charges. The three major cellular operators – Advanced Info Service (AIS, which operates under a BTO concession with TOT), DTAC and True Move – have signed interconnection agreements, but whilst DTAC and True Move are collecting the fees from each other, AIS has not begun to do so because it fears a lawsuit from TOT for breaching its licence. Sigve Brekke, chief executive of DTAC, disputed CAT’s contention that it is entitled to compensation at twice the amount of outstanding charges: ‘I’m 100% confident…We’ve never seen any statement that identified a double fine,’ he said. Mr Brekke said that DTAC, which was listed on the Stock Exchange of Thailand on Friday, had provided calculations of both access and interconnection charges in its first-quarter financial statement, which resulted in roughly equal totals. ‘We don’t care what TOT is doing,’ he said. ‘We’re sure about the access charge case following a study by our legal team, which coincides with a recent decision by the NTC to order TOT to enter into talks with DTAC for an interconnection agreement.’

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The operating contracts of all private mobile phone network providers in Thailand have been ruled illegal under a decision by the Council of State which stated that changes made to concessions between private operators and state-owned TOT and CAT Telecom had failed to meet requirements under the 1992 joint public-private investment law. However, ICT Minister Sitthichai Pookaiyaudom stressed that services will not be interrupted even though all contracts must be renegotiated from scratch, which he said could be completed before the military-backed interim government is scheduled to hold elections – expected by October. The decision was expected by GSM cellcos AIS, DTAC and True Move, which offer services under build-transfer-operate (BTO) concessions, and private-public joint venture Hutchison CAT Wireless Multimedia – as the regime had already declared the contracts illegal before asking the Council of State for a ruling. There will be no move to freeze or cancel the concessions, in order to avoid disruption to services, Dr Sitthichai claimed, although the ruling technically allows it. The ruling leaves open the possibility that recent amendments, which included changes in revenue-sharing terms and concession lifespans, could be made void. The Minister called on the operators to enter into talks on restructuring their contracts to create a level playing field under a single, unified framework. Sitthichai said he expected the negotiations between the two state enterprises and private operators to take around 90 days, after which the cabinet would review the proposals. ‘We expect the entire process to be completed within 180 days,’ he said, adding that: ‘It’s my dream that all concession contracts be made the same. In reality of course, that might not be the case. But at least, each player will pay 30% in revenue sharing [to network hosts TOT or CAT].’ He went on to say that he would propose that authorities move forward with converting existing concession contracts altogether to truly create a competitive landscape, where concessions are scrapped in favour of new licensing agreements. DTAC and True Move, which operate under CAT Telecom concessions, pay the state enterprise 25% of their revenue, a sum that will increase to 30% from 2011, whilst AIS, which operates under a TOT contract, pays 20% of its pre-paid service revenues. Commenting on the upcoming negotiations, DTAC has suggested that AIS’s pre-paid rates be increased to 25% now and 30% in 2011 to bring them to comparable levels.

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Telegeography writes…Hutchison CAT Wireless Multimedia (Hutchison CAT) and CAT Telecom have jointly launched nationwide CDMA2000 1x roaming services over CAT Telecom’s newly built network in 51 provinces and Hutchison CAT’s 1x network covering 25 central provinces including Bangkok. The two companies plan to extend the voice and SMS roaming service arrangement to other CDMA services including 1xEV-DO data applications later this year. Previously, CDMA users were subject to roaming surcharges and had to adjust phone settings when roaming between CAT’s old CDMA IS-95A network and Hutchison CAT’s 1x network. CAT Telecom currently has 1,600 1x base stations, whilst in the central provinces Hutchison CAT has 1,084 outdoor cell sites and 323 in-building sites.

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Telegeography writes…Chinese manufacturer Huawei Technologies yesterday won a deal to extend CAT Telecom’s fibre-optic network in western, central and northern areas of Thailand. Huawei’s lowest winning bid was THB484.5 million (USD13.7 million), compared to the reference price of THB605 million. State-owned CAT is carrying out a two-year project to cover the entire country with a THB1.88 billion fibre-optic network.

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