Joint panel on TOT-CAT merger plan
The Information and Communication Technology (ICT) Ministry is dusting off decades-long plan to merge TOT Plc and CAT Telecom in a quest to revitalise the two state telecom enterprises.
A joint working panel will be set up between the ICT Ministry and Finance Ministry next month to further explore the possibility that consolidating the two agencies will improve their financial strengths and capabilities, said ICT Minister Pornchai Rujiprapa.
"A conclusion on the study is expected by the end of this year," he said.
Attempts by previous governments to merge the two enterprises had failed because it was difficult to analyse and quantify the value of their telecom infrastructure assets.
A number of legal issues also posed great challenges to the consolidation proposal.
Mr Pornchai said the study would explore the possibilities between a complete merging of TOT and CAT and a combination of only some business structures.
The ICT Minister is scheduled to meet CAT's board of directors on Thursday to acknowledge the agency's business turnaround plan, which is part of the government's policy to reform the two state telecom enterprises.
TOT and CAT cannot book any revenue related to concessions on their financial statements after last Dec 20, in compliance with the 2010 Frequency Allocation Act. They need to pass revenue-sharing of concession to the state coffer instead.
CAT reported revenue of 12.67 billion bah in the first quarter, with a net profit of 94.89 million baht, and projects a net profit of 600 million baht this year.
Viroj Tochareonvanith, acting president of CAT Telecom, said the merger proposal needed to be studied thoroughly, especially in areas of the value of the entire telecom network project investments, the number of employees and different organisational cultures.
"Personally, I think it is so difficult to entirely merge the two state enterprises, due mainly to legal shackles," he said, suggesting that consolidating the businesses that could complement each other would be a better strategy to improve efficiency.
The merger proposal had been initiated in 2004 by Surapong Suebwonglee, the ICT minister in Thaksin Shinawatra's administration. The second attempt was made in 2007 under Abhisit Vejjajiva's government. Both attempts failed due to legal issues.