Tuesday, October 30, 2007

IEC and DTAC agree to end airtime contract

The Nation (30 October 2007)

International Engineering (IEC) and Total Access Communication (DTAC) have agreed to terminate their airtime-provider agreement. The move is expected to help the cellular operator cut about Bt100 million a year in expenses. In a filing yesterday with the Stock Exchange of Thailand, IEC said both companies had mutually agreed to terminate the contract DTAC awarded to IEC in April 1998 and subsequent supplement agreements before the April 2015 contract expiry. IEC was paid Bt290 million in cash in return. IEC wants to divest the business, which is expected to generate undervalued return in future. The service is only for DTAC's post-paid subscribers, while consumers today tend to prefer prepaid phone service. DTAC chief commercial officer Thana Thienachariya said IEC had provided airtime service to 70,000-80,000 post-paid DTAC subscribers. The contract termination will enable the company to take better care of its customers and cut the revenue share with IEC of about 13 per cent on each customer's monthly bill, he added. One telecom analyst said the deal cancellation saved about Bt100 million of service fees a year for DTAC. DTAC currently has 14.9 million subscribers. Third-quarter revenue increased 33 per cent year on year to Bt16.4 billion, due to customer growth and February's introduction of an interconnection regime by the National Telecommunications Commission. The interconnection regulations require all telecom operators that signed bilateral interconnection deals to share voice and data revenue proportionately between the networks involved in the calls. The same telecom analyst said DTAC's third-quarter interconnection costs dropped to Bt719 million, from Bt1.457 billion in the second quarter, due to DTAC's promotional packages that encouraged calls within the network. The analyst believes DTAC's fourth-quarter performance will show better results, because the net interconnection-charge expense is expected to decline further, while a price war in the post-paid segment has recently subsided.

Mobile Operators Plan $50 Billion Investment to Blanket Africa With Telecoms and Internet Access


GSM Association Press Release 2007


At the Connect Africa summit, the GSM Association announced that the mobile industry plans to invest more than $50 billion* in sub-Saharan Africa over the next five years to provide more than 90% of the population with mobile coverage. The investment will be used to extend the reach of GSM mobile networks, enhanced with GPRS, EDGE and HSPA technologies, to provide a rich suite of mobile multimedia services, including Internet access. Since sub-Saharan governments began liberalising their telecommunication sectors at the turn of the millennium, the GSMA estimates that the mobile industry has invested $35 billion, providing more than 500 million people (67% of the population) in sub-Saharan Africa with mobile coverage. “This surge in investment by the mobile industry has changed the lives of millions of Africans, catalysing economic development and strengthening social ties,” said Rob Conway, CEO of the GSMA. MTN, Orange, Vodacom and Zain subsidiary Celtel are among the mobile operators planning to invest heavily in the expansion and enhancement of their networks. “We have the passion and dedication to provide Africa with a world class infrastructure,” said MTN Group President and CEO Phuthuma Nhleko. “We are proud to be a leading investor in Africa, bringing world-class services to our customers on the continent through our Celtel subsidiary,” added Dr. Saad Al Barrak, CEO of the Zain Group, while Alan Knott-Craig, CEO of Vodacom Group, said: “We are proud of our investment in Africa, and we will continue to focus on our customers and the development of products and services that benefit them.” There are more than 150 million mobile subscribers in sub-Saharan Africa today. However, a further 350 million people have mobile coverage and are not yet directly connected. As well as extending coverage, the mobile industry is focused on using its economies of scale to connect these people. As the number of users grows, so too will economic prosperity. The GSMA estimates that an increase of 10 percentage points in mobile penetration can increase the annual growth rate of GDP by up to 1.2 percentage points.[1] In order to create the conditions that will maximise the benefit of this new investment, the GSMA calls on governments across sub-Saharan Africa to follow the President of Rwanda, His Excellency Paul Kagame’s advice: “The barriers that governments put in the path of entrepreneurs need to be urgently removed. Individuals and companies create wealth, not governments. This is not to say that the state should become invisible. But governments should see their roles as enablers of business, and not gatekeepers that control and hamper it." In particular, African governments need to ensure that sufficient spectrum is available to enable the hundreds of millions of Africans, who live beyond the reach of today’s fixed networks, to gain access to cost-effective broadband services. The GSMA believes the World Radiocommunication Conference, currently meeting in Geneva, needs to reserve the 750MHz to 862MHz spectrum band for mobile broadband services in Europe, Middle East and Africa. In this spectrum band, radio waves can travel significant distances and provide better in-building signals, helping operators to achieve more extensive and cost-effective mobile broadband coverage, particularly in rural areas. “The world’s governments have an opportunity to narrow the digital divide between those who enjoy high-speed access to multimedia services today and the many people who can’t yet be economically served by broadband networks,” said Tom Phillips, Chief Government & Regulatory Affairs Officer of the GSMA. “It is important that the world’s governments set aside this spectrum in a harmonised way, enabling handset makers to achieve economies of scale, thereby reducing the cost of access devices for consumers.” African Governments also need to address other barriers to the uptake of mobile communications, such as high consumer taxes. Mobile specific taxes are levied in Ghana, Kenya, Tanzania, Uganda and Zambia; if these were lowered or removed, government tax receipts would actually increase as more people will connect and use mobile services, boosting Value Added Tax receipts and stimulating wider economic activity [2]. High license fees and other regulatory bottlenecks, such as international gateway monopolies, constrain the competitiveness of African business.

Many companies find loopholes in tax code

We can't close every loophole, says Mr Satit.
Bangkok Post

Too many companies, while not outright violating the tax code, take advantage of loopholes at the expense of society, said Satit Rungkasiri, a deputy director-general of the Revenue Department.
Reforms are needed to close the existing loopholes in the tax code, he said. "But the reality is that even amending the law cannot close every loophole for those intent on evading the law. Ultimately it depends on the ethics and sense of responsibility of each company," Mr Satit said. He pointed to the use of entertainment expenses as a tax deduction as one area rife with abuse.
The tax law allows companies to claim as deductions entertainment expenses of up to 0.3% of revenues. "But in practice, some companies claim personal expenses as entertainment expenses for clients. Unfortunately, it's something that is quite difficult for the Revenue Department to prove," Mr Satit said. Another example is the deduction allowed for company cars, now set at up to one million baht per car. "Some companies go and buy a Porsche or Ferrari. While they can't deduct the full price of the car, they do claim a deduction, even though it's extremely unlikely that the use of the car is genuinely for the company's operations," Mr Satit said. Other companies siphon or launder money for other illicit purposes through transactions such as the purchase of art pieces at artificially inflated prices. During the 1997 economic crisis, government officials discovered numerous cases of such transactions made to reduce tax liability or to facilitate bribes or payments to third parties. In some cases, the artwork itself was an outright forgery of a prominent artist, further proving that the transaction was simply a conduit for fraud. "At the end of the day, it depends on the heart of the person. We simply can't close all of the loopholes available," Mr Satit said. The Revenue Department recently launched its RD Camp programme to help educate children about their responsibilities as citizens to pay taxes and how evasion simply takes advantage of greater society.

Shortage of new numbers slows growth

Bangkok Post (30 Oct 2007)

AIS, DTAC revise down revenue targets SRISAMORN PHOOSUPHANUSORN. The local mobile-phone market faced slowing subscriber growth in the third quarter in the face of a number shortage and shrinking consumer spending due to the sluggish economy. The result has prompted the two SET-listed mobile operators, Advanced Info Service (AIS) and DTAC, to revise down their revenue growth and subscriber sales targets. Market leader AIS had 800,000 net new subscribers and second-ranked DTAC 400,000 in the three months to Sept 30. In comparison, AIS gained 1.57 million customers in the first quarter and 1.5 million in the second quarter of this year. DTAC added 1.46 million and 1.15 million customers, respectively. Net new subscribers of the three main operators including third-ranked True Move are expected to total nine million for the full year. Thana Thienachariya, chief commercial officer of DTAC, said the drop in the third quarter was largely due to the shortage of numbers allocated by the National Telecommunications Commission (NTC). In July in particular, he said, DTAC gained no net new customers because of the delay in the number allocation. He admitted that DTAC was likely to revise down its 15% revenue growth target this year, but he declined to give a figure. The new customer target, he added, would be 3.2 million, down from four million projected earlier this year. Total Access Communication (DTAC) reported that its third-quarter profit rose 14% on a 33% increase in revenue from interconnection charges. Net profit increased to 1.4 billion baht on revenue of 16.4 billion. But if the interconnection revenue is deducted, revenue increased just 4% from the year earlier. DTAC had 14.9 million customers as of Sept 30. AIS president Wichian Mektrakarn said that even though his company would maintain its revenue target of 90 billion baht this year, it was likely to miss its profit target due to the price war in the second quarter and the overall economic slowdown. However, both AIS and DTAC believe that mobile subscriber penetration would reach 80% by the end of this year, with a total of 52 million subscribers. Net new subscribers are expected at 12 million this year.

Economic forecast set to be revised

The nation ( 30 Oct 2007)

Thailand's economic forecast will be revised on November 23, when the recent oil price hikes as well as global economic conditions will be taken into account, a Finance Ministry official said.

Ekniti Nitithanprapas, director of the Fiscal Policy Office's Macroeconomic Analysis Group, said that Thailand's gross domestic product will be slashed 0.2 percentage point for every US$1 increase in the Dubai crude oil price. Meanwhile, the $1 increase will also push up inflation by 0.3 percentage point, he said.

Still, he favours the idea of letting retail oil prices move along market mechanism, but the government may need to help relieve the burden of low-income earners and the most affected sectors.

The office's current economic growth forecast is 3.8 to 4.3 per cent. Oil prices yesterday rose above $93 a barrel after Petroleos Mexicanos said it was suspending about a fifth of its oil production due to a storm. Its plan to shut down as much as 600,000 barrels of daily crude production came amid political tensions in the Middle East, a weak US dollar and a tight supply outlook that has already pushed crude oil to record prices.

Light, sweet crude for December delivery rose as much as $1.34 to $93.20 a barrel, a new intra-day record, in early afternoon Asian electronic trading on the New York Mercantile Exchange. It later slipped back to $92.84 a barrel. That was still up 98 cents from Friday's record close of $91.86 a barrel. The previous trading high was $92.22 a barrel, set on Friday. Dubai crude oil also gained $2.41 to $82.85.

Thai oil retailers yesterday did not announce any plan to raise domestic prices. Despite the latest movement, Energy Minister Piyasvasti Amranand insisted that the Oil Fund would not reduce obligatory contributions from oil retailers to delay a domestic price hike. He insisted that the Oil Fund should be exploited only in emergencies such as wars. He also noted that delaying a hike today means higher collection tomorrow to cover the expenses as well as interest burden. For every litre of oil sold, the Oil Fund receives Bt1.50 per litre from diesel; Bt4 from octane-95 petrol; Bt3.70 from octane-91 petrol; 70 satang from gasohol 95, and 20 satang from gasohol 91. The ministry earlier said once all the Bt82-billion debt is cleared, the contributions would be split in three parts: one part will be used to finance rail construction, another would be used to cut retail oil prices, and the third part will be banked. While foreseeing that global oil prices will exceed $100 a barrel, he said that it would not stay there permanently. Meanwhile, the Organisation of Petroleum Exporting Countries in November could increase the output and that would ease market jitters. While saying that the strong baht has softened the impact to some extent, he also suggested that Thais use alternative fuels to reduce their higher burden. Product manufacturers are pressuring the Commerce Ministry for permission to raise their prices. The ministry last week approved a Bt3 per kg increase in the ex-farm pork price. Meanwhile, the Energy Ministry is set to reduce subsidies on cooking gas prices around mid-December. With rising pork and cooking gas prices, food shops are preparing to charge their customers Bt2 to Bt3 more per dish. "If possible, I won't raise the dish price but now I think I have no other choice," a Lop Buri food shop owner, nicknamed Noi, said. She said the cost was rising sharply and her small business would not survive if 'rice with toppings' at her shop were not sold at a higher price. Noi said she used to make between Bt500 and Bt700 profit per day. "But the rising cost has left me with only a few hundred baht of profit," she said.

Microsoft joins with hospital

The Nation October 30, 2007

Thailand has become Microsoft Corp's worldwide healthcare research centre following that company's purchase of software and assets to streamline administrative and medical record-keeping at Bangkok's Bumrungrad Hospital.

This is the third acquisition for Microsoft's healthcare group but its first outside of the United States. The company is looking to enter the hospital-software market.

The financial terms of the deal remain confidential, but the US-based giant said it bought software called Hospital 2000 and its intellectual-property rights from Luxembourg-based software company Global Care Solutions.

Global Care has worked with hospitals in this country for seven years. Its 71 Thailand staff will also move with the deal.

Bumrungrad, which owns 14 per cent of Global Care, saw its share price rise Bt1 yesterday to Bt45.50.

Microsoft (Thailand) managing director Patama Chantaruck said the company would establish a healthcare research centre in Bangkok and work with Microsoft centres in China and India. The Bangkok centre will work exclusively on healthcare software for worldwide sales.

"Global Care software is unique and developed to run on a Microsoft platform," Patama said.
Thailand will be a springboard to expand into healthcare markets in Asia, especially China, and around the world, the company said.

In Thailand, the company will seek to sell software to both public and private hospitals, Patama said.

Craig Mundie, Microsoft Corp's chief research and strategy officer, said his company would distribute Global Care products internationally, along with others developed by Microsoft.

The healthcare industry spends US$30 billion (Bt1 trillion) each year on hardware and software worldwide. It is becoming a flagship product area for Microsoft, he said.
Peter Neupert, vice president of Microsoft Corp's healthcare group, said Global Care's products would make a "great addition" to Microsoft's portfolio of health-enterprise products as the company looked to power developing and emerging hospital systems around the globe.
Global Care's Hospital 2000 is an electronic-record system. Its integrated document imaging and delivery allows instantaneous scanning, storage and retrieval of both electronically generated and handwritten material.
It serves both front- and back-office operations, including radiology, laboratories, pharmacies, discharges and transfers, registration administration and clinics and wards.
Global Care sold the software to seven hospitals in five Southeast Asian countries: Bumrungrad, Singapore General Hospital, KK Women's and Children's Hospital, Franco Vietnamese Hospital, Changi General Hospital, Assunta Hospital and Asian Hospital and Medical Centre.
Bumrungrad told The Wall Street Journal's Asian edition that the software helped it manage billing and medical records in several languages and cut waiting times to see doctors to an average of 17 minutes. The hospital treats more than 1.2 million patients a year from countries all over the world, it said.