CAT close to marketing link-up

The Nation (29 October 2007)

Stage agency's board approves plan to sign MoU with Hutchison-CAT

The board of CAT has approved in principle a plan for the state agency to ink a memorandum of understanding with Hutchison-CAT on the joint-service marketing of their separate cellular networks.

A CAT source said, however, that the state agency and its joint venture Hutchison-CAT would have to conclude key issues before they could forge the deal.

According to the MoU, CAT will ask BFKT to transfer the ownership of the Code Division Multiple Access (CDMA) 2000 1-x cellular network in 25 provinces to the agency.

After that, CAT will lease its own CDMA network in 51 provinces and BFKT's network on a wholesale basis to Hutchison-CAT to provide a retail cellular service nationwide.

Hong Kong's telecom giant Hutchison Telecom owns 75 per cent of Hutchison-CAT, while CAT holds the remainder. Hutchison-CAT currently leases the CDMA network from BFKT, which is wholly owned by Hutchison Telecom, to provide the service.

CAT plans to soft-launch its own CDMA network next month ahead of the official launch in January.

The source added that CAT planned to increase its stake in Hutchison-CAT to 49 per cent in order to make higher revenue from the joint-service marketing.

The key issues both parties aim to resolve before the MoU signing include their revenue share from network collaboration. They also have to discuss the price of Hutchison-CAT shares the state agency plans to buy in its share-increase plan.

"CAT and Hutchison-CAT are expected to sign the MoU in January," the source added.
The collaboration between the companies also needs the Cabinet's approval, given that the project value is expected to exceed Bt1 billion, the source said.

CAT has pinned high hopes on the CDMA cellular business in the wake of declining overseas-call revenue.

But it remains to be seen whether CAT can sign up a large number of CDMA customers from the joint-network collaboration, given looming market saturation. Last week Sigve Brekke, chief executive of the second-largest cellular operator Total Access Communication (DTAC), forecast that the number of mobile-phone subscribers in Thailand would reach 65 million next year, up from 52 million this year.

This means the countrywide penetration rate will reach 100 per cent next year, up from the current level of about 80 per cent.

Hutchison-CAT has around 800,000 subscribers after launching in 2003.

Teledirect targets Vietnam, I'nesia

The Nation (29 October 2007)

New division aims to help Thai banks boost fee income

Teledirect, a leading regional provider of telecommerce services, is set to expand into Indonesia and Vietnam within the next two years. The company currently has call-centre operations in four key Asian markets - Thailand, Malaysia, Hong Kong and Singapore - and recently set up a new division, Teledirect Consulting, to provide clients with strategic advice and support in the field of telecommerce and act as business partner.

"In the next two years, we expect to have something in Indonesia and Vietnam," said CEO Laurent Junique, adding this would involve both call-centre operations and consulting services.
Indonesia is a market with a large credit card base, though the revenue per card is quite low, and with very few third-party call centres like Teledirect, he said.

He said Teledirect wanted to be the pioneer of telecommerce services in Vietnam, as it was in Malaysia, Thailand and Singapore, adding that the company believed in the first-mover advantage.

Vietnam is a different market and less advanced than Indonesia, Junique said.

"Many clients who come to us are in the financial sector, both insurance and banking. In Thailand, for instance, about 95 per cent of Teledirect's revenues are from insurance and banking customers. Every client needs to increase revenue every year and it is the duty of Teledirect to help them," he said.

Junique said Teledirect would invest heavily in its first phase of development to expand its sales-acceleration business and take the leading position in this area in the next three years. The focus in the next phase of development will be on customer services, he said.

"Our customer-service business was launched in Singapore last year. Major clients include airlines, which outsource customer-service functions such as ticket booking and reservations to us, and luxury-goods manufacturers, which have appointed us to take care their customer-service function for the whole Asia-Pacific region," Junique said.

He said that while Malaysia has been promoted as Teledirect's operational headquarters for its call-centre business, Singapore is the leading test market for its customer-service initiative.
Jeffrey Manuel, business director of Teledirect Consulting, said the setting up of the new division was linked to the economic environment in Thailand.

He said the insurance penetration per capita in Japan was US$3,700 (Bt126,000) and $1,600 in Singapore, whereas in Thailand it is as low as $80.

"So there is a lot of opportunities for growth in this region, mainly in developing countries such as Thailand where the government is opening up and liberalising the financial sector, particularly banking and insurance. The move will go together with higher awareness of insurance among Thai people as well as improving local infrastructure," Manuel said.

He said interest rates in Thailand were going down, so banks' margins and profits were being squeezed. During economic uncertainty, people put more money in savings accounts and use less credit.

"The banks have an urgent need now to increase fee income, including from selling products like insurance, mutual funds and structured products to customers," said Manuel.
"We [Teledirect] want to come and work directly with business partners to transfer the knowledge and expertise we got in other markets to help them tap opportunities to accelerate their sales," he said.

While banks in Malaysia, which do not sell insurance actively, earn fees of between $2 and $3 per customer, some advanced banks can make up to $20 per customer in fees from insurance sales, Manuel said.

World Bank may add to menu of funding options

The Nation (27 October 2007)

The government now has more choices of loan sources to finance mega-investment projects, Finance Minister Chalongphob Sussangkarn said yesterday.

"The World Bank is considering lending local currency to middle-income countries, which will benefit Thailand greatly," Chalongphob told reporters after he returned from Washington, where he attended the annual meeting of the World Bank and International Monetary Fund.

For years, Thailand has not borrowed from the World Bank since it only lends in dollars. If the World Bank offers Thailand baht loans, it would help the country significantly, he said.

Borrowing in dollars would create pressure on the exchange rate. The World Bank has adopted a new policy of supporting the middle-income group, he said. Borrowing from the World Bank has advantages because the bank also offers technical support. In the past Thailand largely borrowed from the Japan Bank for International Cooperation (JBIC). The government is also waiting for loans from the JBIC to finance mass-transit projects in Bangkok.

Chalongphob said the government had more choices now that the Export-Import Bank of China also offered loans to governments. "These offers are a menu we can choose from to meet our needs," he said.

In another development, Chalongphob said he would submit the draft of the Currency Act to the Cabinet on Tuesday. This will be the third time after Chalongphob postponed pushing it through the National Legislative Assembly.

"Ministers will better understand the draft bill after considering it several times," he said.
He promised to cut the controversial clause that would indirectly allow the central bank to use its accumulated profit or special reserves to pay back the debts of the Financial Institutions Development Fund.

Baht warning for Democrats

The Nation (27 October 2007)

Finance Minister Chalongphob Sussangkarn yesterday warned the Democrat Party that its policy to scrap the central bank's 30-per-cent reserve requirement would shoot the value of the baht up without any measures available to curb capricious movements.

Democrat leader Abhisit Vejjajiva recently said that if his party formed the next government, he would lift the Bank of Thailand's capital controls to boost investor confidence.

Chalongphob said the global currency market was still fragile with high volatility of capital flows. He said it was the global trend for the US dollar to weaken and middle-income countries like Thailand and India to risk rapid capital inflows. "If the world market is normal, capital controls are not needed," he said.

For the past month, the central bank has intensively "monitored" the currency market and kept the baht from rising too rapidly, while regional countries have seen their currencies soar sharply, he said.

Inflation has been under control despite the recent steep surge in global oil prices, thanks to the central bank's focus on inflation pressures, he said.

The dollar would weaken further and draw capital flows into middle-income countries, building pressure against the exchange rate. A sharp appreciation of the baht would hurt export competitiveness, he added.

Korn Chatikavanij, deputy secretary-general of the Democrat Party, said capital controls might not be the answer to baht instability.

He attributed the recent rise of the baht to an imbalance in baht/greenback demand, as seen by the growing trade and current-account surpluses. Consumption has been slowing down while the export sector was ramping up. This has led to higher demand for the baht against lower demand for the dollar, leading to the baht's rise.

He said capital controls did not address the baht problem. The central bank has other tools that are more effective in steadying the baht, such as buying up greenbacks.

Meanwhile, the stock market jumped to a fresh 11-year high of 911.6 points before closing flat yesterday at 894.57, with foreign investors snapping up energy and banking shares. Turnover was Bt33.46 billion. Foreign investors made net purchases of Bt5.05 billion, while institutional and retail investors were net sellers by Bt888.83 million and Bt4.16 billion, respectively.

An analyst from Trinity Securities said the SET rallied mainly on foreign appetite for energy and banking blue chips. Energy stocks have been boosted by rising global oil prices, which set a new record of US$92.09 (Bt3,144) per barrel at WTI and $88.39 for Brent crude oil.

The Trinity analyst said local energy stocks were cheap with a price-earnings ratio of only 11 compared to 18-20 times at other markets in Asia. That makes Thai energy stocks attractive and pushes up the whole stock market. The current resistance level of the SET is 920, he said.

Tisco Securities sees the SET Index reaching 1,000 in January due to the "January Effect" as well as expectations of economic recovery after the new government is set up. The current market volatility presents an opportunity for investors to stock up on Thai companies. The securities house said the SET Index should reach 900-930 next month.

Assistance for foreign investors

The Nation (29 October 2007)

The Washington-based head of a business-diplomacy consulting firm talks to KI Woo about the company's new operations in Thailand and existing activities throughout Asia.

Foreign companies investing abroad face a multitude of challenges. Even if they are major players in their home countries, they often need local experts who know the lay of the land to guide them through many intricate, and often unseen, hurdles.

Margery Krauss, the CEO and founder of Apco Worldwide, a Washington-based global communications consulting company with offices in 28 countries, recently told The Nation her company specialises in helping multinational companies from the US and Europe compete successfully in foreign markets.

"I would like to characterise what we do as business diplomacy," she said.
Krauss, who attended her company's mid-October grand opening in Bangkok, said Apco helped companies strategically position themselves in new markets.

"We help them build, defend and consolidate their reputations through communications and other related shareholder activities," she said.

Krauss said that when companies entered new markets, Apco first helped them determine what type of face would optimise their presence.

"Our experienced people on the ground can assist with government relations, business relationships and help articulate how companies will be viewed by potential employees," she said.
Apco, which was started by Krauss in 1984 as an offshoot of top-tier legal firm Arnold and Porter, continues providing litigation-communications support to clients in the US and Europe. In addition, the company helps clients traverse the new challenges often posed by regulatory authorities in different parts of the world. "That is the 'defend' part of our business."

Krauss said Apco's seasoned experts, who come with a wide variety of experience in each market, help clients deepen relationships through communications and external relations. The company's local people are experienced in many business areas and have a clear understanding of the city, country and the people in each market.

"They help clients build and profit from their presence."

Apco works with many Fortune 500 companies, including Microsoft and UPS, and has expanded with them as they open new markets globally.

"We have an eclectic mix of services all geared to the corporate suite," she said.
Krauss said the company had expanded because in each market it offered an integrated set of skills that circled around an understanding of the local market.

"Our people know what it takes for a business to be successful in a particular market, and we want to be our clients' partner of choice when they enter new markets," she said.
In Thailand, Apco has asked retired senior banker James Stent to drive the company's formation.

"Jim has had more than three decades of financial-institution and business experience throughout Asia, and we believe that he and the team he has assembled will provide great services to our clients," she said.

Krauss said the company had expanded to different countries by finding experienced and well-respected people like Stent who really understood a market.

"We then build the kind and range of skills around that person or group of people."
The company has gone through several transitions under Krauss' tutelage.

"I started out as a one-person firm that handled a client's non-legal needs that were necessary for successful operations," she said.

Krauss gradually built the firm's operations in the US and did not expand abroad until 1991, when Arnold and Porter was asked by the Russian government to draw up its new joint-venture laws.

"Apco was in a prime position to help its clients expand into Russia by helping with many non-legal requirements that needed on-the-ground responses," she said.

Arnold and Porter sold its Apco stake in 1991 to Grey Advertising, a global company with operations in more than 200 cities worldwide. With Grey as a shareholder, Apco expanded into many European and Asian cities during the next decade, including Asian offices in Beijing, Guangzhou, Shanghai, Hong Kong, Hanoi, Ho Chi Minh City, Jakarta, New Delhi, Singapore and Bangkok.

"We followed our clients as they expanded," she said.

In 2004, Krauss brought in a private-equity firm that bought out Grey. "We are now an employee-owned company with 600 staff worldwide," she said.

Hutch marketing deal likely

Hutch marketing deal likely
Bangkok Post (27 October 2007)

CAT Telecom expects to conclude a marketing deal with Hutchison of Hong Kong for nationwide Hutch mobile phone service within the term of the current military-backed government. A CAT director said yesterday that the board would meet today in Pattaya to discuss the details of the service collaboration with Hutchison.

If the board agreed on the plan, a memorandum of understanding could be signed within two weeks.

At that point, CAT would draft a contract while it awaits a ruling from the Council of State, the government's legal advisory body, on whether the deal needs cabinet approval.

The 1992 public-private joint venture law calls for cabinet approval of ventures worth more than one billion baht in order to encourage transparency.

Under the marketing joint venture, Hutchison would transfer its CDMA 1x network owned by subsidiary BFKT in 25 central provinces to the state telecom enterprise. BFKT would also absorb all the accumulated debt of Hutchison CAT Wireless Multimedia, which is 74% owned by Hutchison and 26% by CAT.

In exchange, Hutch wants to be the sole marketer of CDMA services nationwide, including the network in the 51 provinces where CAT has invested on its own. That network was built by Huawei Technologies of China.

CAT's holding in Hutchison CAT Wireless Multimedia would then increase to 51% from 26% at no extra cost under the deal.

The director said that CAT and Hutchison were hopeful that the deal could be concluded within the term of the current government as they were not certain the next government would approve it.

Hutch now has 800,000 subscribers in a cellular market of close to 48 million.

Economy's Weak Signals Persist

Economy's Weak Signals Persist
The Wall Street Journal (27 October 2007)

Housing, Jobs Data Raise Further Slowdown Worries; Some Bright Spots Emerge
The latest readings on the U.S. economy show continuing signs of weakness: Sales of newly built homes over the summer were weaker than previously estimated, September manufacturing was subdued, business inventories are mounting and the job market is displaying worrying signs of erosion.

REAL TIME ECONOMICS

• Read the latest news and analysis on the economy at WSJ.com's Real Time Economics blog.
The data also offered some hopeful signs. New-home sales, albeit a volatile measure, logged a surprise 4.8% increase in September, and the inventory of unsold homes declined. Growth in business investment continues, though it has decelerated in recent months.

"We have all this weakness from housing but at the same point we have good business spending, good consumer spending, healthy exports. When you add it all up, you end up with an economy that's likely to grow, but grow at a smaller pace than in the past," said Drew Matus, an economist at Lehman Brothers.

The new information bolstered the view that the U.S. economy expanded at better than a 3% annual rate in the third quarter and largely upheld predictions that the fourth quarter will be weaker. "The data have been soft, but it's no softer than what's already in people's forecasts," said Haseeb Ahmed, an economist at J.P. Morgan Chase.

As concerns mount about the slowing pace of economic growth and the risks ahead -- from the nascent credit crunch to energy prices -- markets are increasingly anticipating that the Federal Reserve will cut short-term interest rates at its meeting next week.

The Commerce Department reported that new-home sales in June, July and August were revised down, offsetting the goods news about September. Still, the inventory of unsold homes shrank to 8.3 months' supply from nine months in August; the median sales price rose, but the average price slipped.

Skeptics aren't convinced that the bounce in new-home sales suggests the worst of the housing mess is over. "New-home sales numbers are notorious for being volatile and for being revised," said Patrick Newport, an economist at Global Insight, a research firm in Boston. As evidence of continued distress, economists pointed to the 10.2% decline in new-home construction last month, as well as the 8% drop in sales of existing homes, which account for more than 85% of all home sales, reported earlier this week.

And the new-home sales report doesn't reflect cancellations. If included, they would likely drag down the tally. D.R. Horton Inc., the largest U.S. home builder by sales, reported last week that almost half of its home orders were cancelled in July, August and September.

A separate Commerce Department report on manufacturing showed that business investment hasn't yet succumbed to weakness elsewhere in the economy. Orders for durable goods, which are intended to last three years or more, fell 1.7%, largely on a decline in defense-related orders. Excluding defense, orders rose 0.7%. Orders for nondefense capital goods excluding aircraft, an important gauge of capital spending, rose by 0.4%, and the previously reported August decline was revised to show a shallow 0.1% gain.

The Labor Department reported that claims for unemployment benefits fell by 8,000 to 331,000 last week; the four-week moving average rose to 324,750, the highest level since the beginning of September and a hint that the labor market is weakening.

Continued strength in the job market is essential to keeping consumer spending going. Earlier this week, women's clothing retailer Talbots Inc. cut its sales forecast for the fall season, saying the "continued uncertainty of the economic environment" was weighing on consumers. Luxury retailer Coach Inc. warned that holiday profit would miss targets because of weak traffic at its U.S. stores and Target Corp. lowered its October same-store sales forecast.