Thread: TOT eyes B214bn in damages

http://www.bangkokpost.com/news/loca...4bn-in-damages

TOT eyes B214bn in damages

Compensation claim rocks industry, stocks

• Published: 2/02/2011 at 12:00 AM
• Newspaper section: News

TOT Plc has sent a jolt throughout the telecom industry by announcing it plans to seek 214.7 billion baht in compensation from local telecom operators for unpaid access charges and losses resulting from improper policy changes made by past governments.



Mobile operator Advanced Info Service was hit yesterday with a claim for 74 billion baht for unpaid compensation following the illegal amendments to its concession with TOT during the Thaksin Shinawatra government.

Thaksin, who founded AIS and the telecom conglomerate Shin Corp, AIS's parent company, was found by the Supreme Court in February 2010 to have abused his power by approving the use of an excise tax on telecom services to reduce revenue-sharing concession payments, as well as allowing the amendment of concessions that ultimately reduced payments to state-owned TOT.

Two fixed-line telephone operators, True Corp and TT&T, will also be subject to demands for compensation. TOT is also seeking payments of 138.6 billion baht from Dtac, Thailand's second-largest mobile operator, True Move, Digital Phone and state-owned CAT Telecom for what it claims are unpaid access charges for the use of its network.

The announcement prompted the sale of listed telecom stocks, pushing down the broad Stock Exchange of Thailand index 0.46% even as most other regional markets closed higher yesterday.

Separately, cabinet ministers yesterday agreed to give the ICT Ministry 15 days to negotiate with AIS, Dtac and True regarding a separate dispute on the legality of past concession changes made by all three mobile operators with TOT and CAT Telecom.

Analysts said the developments would probably further delay efforts to strengthen the country's telecoms infrastructure because of regulatory risk and policy uncertainties.

TOT deputy president Hutacharoen Noppanat said the agency was acting to protect the interests of the public.

"The TOT is not singling out any one party. We are taking action now to protect our rights before the statute of limitation for certain cases expires," he said.

All three main mobile phone operators and the two private fixed-line phone operators operate under concession contracts with either TOT or CAT Telecom dating back in some cases nearly 20 years.

Many amendments to the original concessions have been made over the years, in some cases to support new services and in other cases to adjust revenue-sharing terms or extend operating periods.

TOT will seek 36.99 billion baht in compensation from AIS for foregone revenues dating back to 2001, when the sixth amendment to its concession reduced revenue-sharing rates to 20% for pre-paid subscribers, compared with 25% to 30% based on its original agreement.

Another 36.8 billion baht in claims will be filed seeking compensation for lost payments after the Thaksin government illegally approved a excise tax on telecom services.

TOT chairman Areepong Bhoocha-oom denied reports the agency had already submitted claims to the private operators. The TOT board will meet on Feb 11 to finalise the action.

Mr Areepong, also the finance permanent secretary, said the filing was based on the law. If negotiations failed, the dispute would have to be settled through arbitration.

Legal experts said the arbitration procedure could take over a year to resolve. If arbitrators rule in favour of TOT, the agency would then have to pursue the case in the Civil Court, a process that could take years to resolve.

Securities analysts said brokers should consider avoiding telecom stocks for now.

Thitithep Nophaket, an analyst at Phatra Securities, said it was unusual how the access charge payments demanded by TOT from True and Dtac were three times higher than that calculated by the companies themselves.

"The issue will likely have an impact on investor sentiment. How much will depend on what happens next," he said.

Chai Chirasevenupraphund, research head at Capital Nomura Securities, agreed the news would hurt share valuations for the affected telecom stocks, and that most brokers would now likely cut their target price forecasts.