CAT needs concession fees

Bangkok Post (6 November 2007)

CAT Telecom would have performed poorly in the year to September if the state enterprise was not allowed to book concession revenue, raising fears about its viability in the future following sector reform.

For now, CAT Telecom can still book the concession revenue, and saw its profit jump 115% from the same period last year. Without that income, CAT's net profit would have risen a mere 3%, said CAT senior executive vice-president Jirayut Rungsrithong.

From January to September, CAT earned 34.85 billion baht in revenue and a 7.06 billion baht net profit, up 115% from the same period last year. Of the revenue, 15.67 billion baht came from its own operations and 19.18 billion baht from concession fees.

Without concession fees, CAT's net profit would have inched up 3%, or 461 million baht, from the first nine months of 2006, he said.

Concession fees actually skyrocketed 166% when compared with same period last year, he said. This was due to the adjustment of revenue-sharing under the concession agreements and the transfer of assets to CAT. The removal of the excise tax also led to higher fees.

On the operations side, Mr Jirayut said the company's net profit was depressed after paying staff on the early retirement programme and increased expenditures on telecom services. CAT's international direct-dialling service also saw revenue decline 2% to 7.16 billion baht, compared to 7.32 billion last year.

Earnings from CAT's data business rose 12% to 6.05 billion baht, he said. IDD contributed 21% of total revenues to CAT, while concession fees comprised 55%.