The Thai government should reduce its stakes in the country’s two state-owned telecoms operators from 100 per cent to no more than 51 per cent, the Thailand Development Research Institute (TDRI) has recommended.
TDRI’s chairman Somkiat Tangkitvanich told the Bangkok Post that reducing the Finance Ministry’s stake would help end “the tradition of political intervention” and open up the door for private investors and more competition, which would help turn around the under-performing firms. “Any wholly-owned state enterprise has already proved a failure when it cannot create a sustainable business model,” he said, noting a lack of business continuity brought about by frequent board and management changes, the Post reported.
The companies face an uncertain future now that the country has switched to having spectrum auctions from awarding concessions (under a build-operate-transfer model), which have or soon will expire.
TOT lost THB1.3 billion ($39.5 million) in the first half of the year and is on track for a THB4.57 billion loss for the full year. CAT is forecast to have a THB1.7 billion profit on revenue of THB55 billion. TOT has 20,000 staff while CAT has 6,000.
Somkiat, however, doesn’t support merging the two operators, since he doesn’t think it would solve the problems the state-run companies face.
Thailand’s government last week called for the two state-owned telecoms operators TOT and CAT Telecom to merge and reduce costs by 10 per cent.
The country’s cabinet approved a plan by the State Enterprise Policy Commission, which was set up by the National Council for Peace and Order to review the operations of a number of state enterprises. The commission ordered TOT and CAT to submit plans for cutting non-core businesses and focus on six core areas to enable it to streamline operations and cut costs.
The country’s ICT Ministry and Finance Ministry announced in October they were discussing the possibility of merging the two firms.
A source involved in writing the commission’s plan told Mobile World Live that there would likely be a breakup of each organisation into five to six subsidiaries, which would need to find private joint-venture partners.