CAT board approves sale

The Nation (11 January 2008)

State agency wants to focus on own CDMA service

The board of CAT Telecom has approved the state agency's plan to divest its shares in Thai Mobile to TOT, the other partner in the joint-venture cellular operator.

CAT owns 42 per cent of Thai Mobile, worth Bt2.4 billion, and TOT the rest.

Spokesman Piriya Siriboon said the agency wanted to focus on its own Code Division Multiple Access (CDMA) 2000 1-x cellular service.

As well as owning a CDMA network covering 51 provinces, CAT also holds a 26-per-cent stake in Hutchison-CAT, which markets a CDMA service via a different network covering 25 provinces.

CAT is still negotiating with Hutch's major shareholder, Hong Kong-based Hutchison Telecom, about a collaboration to bring the two CDMA networks together.

Piriya said the board would meet again on January 19 to discuss CAT's five-year business plan, which is aimed at improving the agency's operating efficiency. The plan will see CAT relying less on concession revenue.

Last year, CAT recorded unaudited revenue of Bt47.207 billion, of which Bt28.814 billion was concession revenue and the remaining Bt18.393 billion was operating revenue.

Its net profit last year was Bt12.130 billion. Of that, more than Bt11 billion was earned from concessions and the rest from business operations.

CAT president Phisal Jorphochaudom said the agency had a cash flow of Bt17 billion for new business development. It also had reserves of Bt4 billion to be paid to TOT for access charges.

He said the state agency would also urge Chinese telecom-equipment supplier Huawei Technologies to install its CDMA network completely in 51 provinces this month. After its completion, CAT plans to calculate the fine it will impose on Huawei for late delivery.

In 2005, Huawei quoted Bt7.2 billion to win the job to deploy 1,600 base stations in two phases of 800 each. Early last year, CAT's board decided to exercise a contract provision under which it could penalise the supplier at a rate of Bt90 million a day for late delivery.

Huawei says the dispute stems from different interpretations of the contract. Huawei believes it had to deliver the second phase by last January 26, which it did. It also believes a complementary high-speed software package was supposed to be completely installed in the network this year.

But CAT says the contract stipulates that the entire network had to be delivered last January.
After the conflict erupted, Huawei delivered the high-speed software package last November.
On Wednesday, Huawei disclosed that it had filed a petition with the Central Administrative Court, because CAT Telecom had yet to pay a second instalment amounting to 25 per cent of the total project value, which was due last February.

Phisal said CAT had yet to report Huawei's legal action to the board.

Meanwhile, Piriya said the CAT board had stated its preference for the interconnection-charge regulations introduced by the National Telecommunications Commission (NTC), rather than TOT's access-charge regulations.

The access charge is a payment CAT and its three private cellular concessionaires have made to TOT for routing their customers' calls to different networks via TOT's facilities.

The NTC introduced the interconnection regulations last year, requiring all operators to share voice and data revenue between networks involved in calls on a bilateral and proportionate basis.

CAT has already begun negotiations with cellular operators to fix bilateral interconnection-charge rates. However, the cellular operators have rejected CAT's offer to pay them an interconnection rate of 21 satang a minute, saying the rate was unacceptably low.