Confidence at lowest for 65 months

The Nation (9 November 2007)

But election offers some hope: UTCC

The Consumer Con-fidence Index dropped to a 65-month low last month, due mainly to skyrocketing oil prices and worries about the rising cost of living, the University of the Thai Chamber of Commerce (UTCC) said yesterday.

The index declined to 75.5 points, from 75.8 in September, hitting its lowest level since 2002. Other indexes related to consumer confidence also shrank to record low levels.

However, consumers were optimistic about future growth as the national election approaches.
Thanawat Phonwichai, director to the university's Economic and Business Forecasting Centre, said consumer confidence would decline continuously if the retail price of diesel were to surge to Bt30 per litre.

"Consumer confidence is forecast to continue sinking to its lowest level in the first quarter next year, if oil prices continue to rise," he said.

To encourage consumer confidence, the university suggested the government control diesel prices, which are a major element in manufacturing costs. The government must also control the prices of consumer goods to ensure the burden on consumers is not too onerous.

Thanawat said the Consumer Confidence Index could rise next month with the approach of the national election. People will be more optimistic of a clearer political situation emerging, which will boost consumer confidence.

Based on a survey of 2,253 respondents, confidence in the overall economy decreased considerably from 69.2 in September to 68.6 points last month. Confidence in employment opportunities fell from 70.3 to 69.8 points in October.

Confidence in future income increased slightly from 87.8 to 88.1 points, and the index on the overall future increased from 74.9 to 75.1 points.

A level below 100 points indicates economic pessimism.

Retail oil prices surging by Bt1.20 per litre last month had the biggest effect on consumer confidence.

Thanawat said 92.6 per cent of respondents expressed high concern about oil prices as a major factor directly affecting their cost of living.

As well as global oil price rises, other negative factors affecting confidence included concern about the rise in the price of consumer goods, the strengthening of the baht, flooding in the North, Northeast and South, and a lack of concrete plans by the government to stimulate the economy.

Positive factors leading to a rising trend of consumer confidence were the proximity to the general election, maintaining the policy interest rate at 3.25 per cent, expected economic expansion of 4.3-4.8 per cent next year, continual growth in exports, and a 61.78-point rise in the Stock Exchange of Thailand Index in October.

Research Division vice president Saowanee Thairungroj said more than 50 per cent of respondents said that now was not a suitable time to invest, travel or purchase a new car or house.

The index for the gross domestic happiness of consumers continued its fall last month, due to concerns about the rising cost of living and political instability.

The so-called happiness index slumped to 97.7 points, from 98.9 in September.

Bt64 bn set for new TOT network

The Nation (9 November 2007)

State agency will also cut 2,000 staff through early retirement.

TOT will spend Bt64 billion from 2008 to 2011 on installing its new cutting-edge network, and will eliminate 2,000 staff for leaner operations in accordance with its turnaround plan.

Spokesman Natee Sukonrat yesterday said TOT would spend Bt16 billion during each of the four years to install its next-generation network (NGN) nationwide and expand its broadband-Internet network. Of the budget, 60 per cent will be for the NGN roll-out.

The NGN will enable TOT to offer voice and data services efficiently and earn more revenue, Natee said. "We've no problem financing the project," Natee said. "Usually, we spend Bt12 billion a year on expanding our existing telecom networks."

TOT now has about 200,000 broadband-Internet subscribers. Telecom industry experts predict total broadband-Internet subscriber numbers in Thailand will reach 1 million this year, from the present 800,000.

TOT and CAT Telecom must respond quickly to intense competition from private telecom operators.

One telecom analyst said TOT was making a viable move by focusing on the broadband market instead of the saturated cellular market.

"It may be the only way for it to survive," the analyst added.

Natee said broadband Internet would become TOT's main revenue source by 2011, at which time it is expected to contribute 70 per cent of total income, replacing fixed-line voice service, which currently accounts for 70 per cent.

He added that the Finance Ministry, sole owner of TOT, ordered the state agency to come up with the turnaround plan.

The board recently asked TOT to add more details to the plan, which will be presented for its consideration next week before being forwarded to the ministry's State Enterprise Policy Office.
Moreover, TOT will cut staff to 17,000 between next year and 2011, from 19,000 now, through an early-retirement programme. The programme will cost TOT about Bt3 million per staff member.

TOT projects total revenue of at least Bt63 billion in 2011, up from this year's forecast of Bt50 billion. Excluding concession revenue, it should post Bt38 billion in 2011, up from this year's expected Bt28 billion.

TOT owns the concessions of Advanced Info Service, True Corp and TT&T.

In 2011, TOT expects to achieve a high net profit of Bt7 billion, the same as last year, Natee said.

The state agency's revenue projection excludes access-fee revenue, given that Total Access Communication (DTAC) and True Move stopped paying the fee to TOT last November, instead turning to comply with the National Telecommunications Commission's interconnection regulations. Their combined outstanding access fees are about Bt10 billion at present.

TOT previously earned more than Bt14 billion a year in access fees from three of CAT's cellular mobile-phone concessions - DTAC, True Move, and Digital Phone - for their connecting different networks via TOT's facilities.

The interconnection regulations require the telecom operators, which signed bilateral interconnection-charge deals, to share voice and data revenue between the networks involved in the calls.

The leasing of the third-generation (3G) broadband wireless network to cellular operators is intended to serve as its new revenue source, but TOT has made no progress in its plan to roll out the 3G network nationwide. This is because CAT Telecom has yet to make a decision on whether to sell to TOT all of its shares in their Thai Mobile cellular joint venture.

TOT and CAT own 58 per cent and 42 per cent, respectively, of Thai Mobile, the sole cellular operator owning the 1900-megahertz cellular spectrum, a platform for offering 3G service.

AIS group starts data promotion

The Nation (9 November 2007)

Bridge Alliance, of which Advanced Info Service (AIS) is a member, will launch promotional packages for international data roaming services with flat rates across the region.

The alliance consists of 11 major regional cellular operators - Airtel of India, AIS, CSL of Hong Kong, CTM of Macau, Globe Telecom of the Philippines, Maxis of Malaysia, SingTel of Singapore, SingTel Optus of Australia, SK Telecom of Korea, Taiwan Mobile and Indonesia's Telkomsel - with a combined 175 million subscribers.

AIS chief executive Vikrom Sripratak said the flat rate throughout the 11 countries would encourage AIS subscribers to access data content while travelling overseas and boost the company's international roaming revenue.

AIS has recorded outbound customers numbering around one million this year, of which 600,000 used international data access roaming. Of total annual international roaming revenue, 20 per cent is from data access. In the second quarter, AIS international roaming revenue accounted for 4.2 per cent of its service revenue of Bt19.597 billion.

The promotion offers two options. The first one charges Bt1,040 monthly for access to up to 15 megabytes of information, equivalent to around 300 e-mails or 150 web pages.

The second charges Bt2,080 monthly for data access of 40 megabytes. AIS customers can subscribe to these packages from next Monday.

AIS deputy president Hui Weng Cheong said the packages would help subscribers to save around 90 per cent of international data roaming costs when compared to earlier charges, which varied among alliance operators.

TOT cuts reliance on fixed lines

Bangkok Post (9 Nov 2007)

Broadband revenue to make up 70% of total.

The TOT board says it will invest 64 billion baht to diversify its core revenue source away from fixed-line telephone service, which is plunging due to the fast-growing broadband business, under a four-year turnaround plan. The scheme aims to increase the proportion of broadband revenue to 70% of total earnings by 2001, compared with 30% currently.

Colonel Natee Sukolrat, a board director and spokesman, said that the four-year turnaround draft for 2007-10, which was finished last week, would be submitted for board approval next week.

Under the plan, TOT would spend 16 billion baht annually until 2010 to convert its core fixed-line network to NGN or next generation network technology using 70% of its total investment capital.

NGN technology could allow the TOT network to handle images, voice, data and broadband internet, he said.

The state telecom enterprise forecasts revenues of 50-63 billion baht in 2010 when the NGN is complete.

The plan would turn the ailing TOT into a strong competitor after suffering declining earnings from fixed-line services and public telephones, which are its core businesses.

TOT's revenues have been shrinking ever since two mobile operators, DTAC and True Move, stopped paying network access charges that normally bring in 14 billion baht a year for TOT.

The mobile firms stopped making payments last November, claiming that interconnection charges approved by the National Telecommunications Commission took precedence.

Col Natee said TOT would now focus on broadband services, multimedia circuit leasing, wireless communications, and WiFi.

TOT expects revenue to grow by 9% a year under the turnaround plan.

It did not fix target for return on investment because it was an initial forecast that needed approval from the Finance Ministry, TOT's sole shareholder.

''If the ministry rejects the turnaround plan, then TOT is not able to invest any further,'' he said.
The board spokesman said that third generation or 3G mobile phone service would not be initiated under this government because it had not been put before the cabinet for consideration.

It was thus very likely that the 3G service would have to be decided by the elected government, he said.

In another development, TOT deputy president Kittipong Taemayapradit said TOT was considering stopping paying dividends amounting to 40% of net profits to the Finance Ministry due to steep falls in revenue as customers moved toward mobile phones. The company would still pay corporate tax of 30%.

Last year TOT paid dividends and corporate taxes of 9.8 billion baht to the Finance Ministry. In the eight months from January to August, TOT earned only 34.5 billion baht, down five billion baht from the revenue it earned in the same period last year.

TOT's net profits also dropped from 5.68 billion baht to 4.02 billion baht for the period.
Loss of access charge payments by mobile operators has cost TOT almost 10 billion baht from the previous earnings of 14 billion baht a year.

Meanwhile, TOT has adjusted its forecasts to accommodate a 4% salary increase for its staff, which will cost it another 400 million baht a year.

TOT was recommended by Tris Ratings to submit a plan on reviving its business after facing a crisis when the two mobile phone operators stopped making their access charge payments.

Under Tris's recommendation, TOT is to submit a qualitative plan by next month, while a quantitative plan has been submitted every three months.

TOT was corporatised in July 2002 to prepare for open competition and a stock market listing, which has since been postponed indefinitely.

But five years on, the heavily overstaffed state enterprise has still underperformed the booming local telecom sector.

Revenues fell for three consecutive years after it changed from a state enterprise to a public company.

In 2004, TOT earned 76.9 billion baht with 11.42 billion baht in profit. But in 2005, its revenues fell to 76 billion with a profit of 6.7 billion. In 2006, revenue was 75.76 billion baht and profit improved slightly to 6.98 billion baht.

This year, TOT's first-half revenues fell sharply to 25.94 billion baht with a mere 2.8 billion baht in profit.