| Thailand Heads Toward Telecom Liberalization
March 17, 1998 (BANGKOK) -- Thailand officially kicked off its
long-awaited telecom sector liberalization program on March 3
with the cabinet approving a draft of reforms to shake up the
|The package of laws renews Thailand's commitment to the World
Trade Organization to fully open its market by 2006 and provides
a framework for the liberalization and privatization of state
enterprises that currently control much of the sector.
If things go as planned, the new rules for competition will take
effect in March 1999, seven months ahead of earlier expectations.
The reform program is in four parts. The first calls for the
conversion of all telecom concessions currently held by the
state-run Telephone Organization of Thailand (TOT), the
Communications Authority of Thailand (CAT) and the Post and
Telegraph Department (PTD).
The second brings in new tariff structures that are supposed to
reflect the actual costs of telecom infrastructure investment and
lay down standard prices for existing and new players in the
The third part states that the TOT and CAT will have to undergo
revolutionary changes as both have to be privatized to better
compete with private firms. The details of how this will be
achieved have yet to be decided.
According to press reports, each of the state enterprises will be
required to offer 25 percent stakes in a bid to woo strategic
foreign partners. Bidding for the CAT stake is expected to open
later this year, while the TOT plans to call bids in 1999.
Later, a further 22 percent of the equity in the two entities
will be offered in private placements before a 23 percent stake
is sold to the public and the firm is listed on the stock market.
The government will continue to hold a 26 percent stake in the
new firm while the remaining four percent will be reserved for
The fourth part deals with the legal groundwork that needs to be
prepared to end the enshrined monopolies of the TOT and the CAT.
This process will include the establishment of the country's
first regulatory body for the telecom industry which many
observers expect to be based on the U.S. Federal Communications
In preparation for this, the cabinet in February approved the
State Enterprise Capital Act to accelerate the amendment of the
country's state enterprise laws.
Under the just-passed reform program, the PTD will be dissolved
to become the secretariat of the regulatory body, which is in
charge of implementing and enforcing new rules covering
Public reaction to the liberalization laws has focused on the new
telecom tariff structure, which is expected to lead to a hike in
monthly bills for local telephone users. Business groups have
also expressed fear about talk within government circles of
reviving a time-metering concept for local phone calls.
Thailand's economic woes have accelerated the privatization
process with the country needing to raise funds to meet the
fiscal targets set by the International Monetary Fund's US$17.2
billion bailout program.
(Chris Burslem, Asia BizTech Correspondent)
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