What to do with Thailand's antiquated state-run telecommunications enterprises?
By Jon Fernquest
Thailand
has two gigantic state telecommunications enterprises: CAT and TOT. Some critics feel that CAT no longer has any useful function.
CAT makes around 63% of its total revenues from concessions which are payments to the government for official permission to run a telephone service.
In the first two months of this year, 66% of CATS revenue came from concession fees collected from DTAC, True Move and Hutch
CAT also lost 135 million baht in the first two months of this year, if revenues from concessions and from the Hutch mobile service are excluded.
During this period CAT's net profit also fell 22% to 1.25 billion baht from 1.6 billion.
In fact, CAT and TOT might die immediately if new 3G licenses were issued and telephone companies stopped paying them the whopping 30% of revenue concession fees, fees received for doing essentially nothing (Read previous article).
The mother of all telecommunications concessions in Thailand is, of course, Thaksin's AIS concession that made him a billionaire, his first step to becoming Prime Minister, received essentially as a political gift (Read more in Pasuk and Baker's Thai Capital (pages 105-153) and Thaksin: The politics of business in Thailand (pages 41-51)).
CAT used to get an important part of its revenue from a long-distance telephone monopoly for international direct dialling (IDD).
The only problem is that internet telephone services (VOIP) have largely replaced traditional phone services. Services such as Skype and Yahoo Messenger with a webcam as well as phone cards have become popular recently. IDD usage and revenues have declined as a result. IDD revenue dropped 22% recently and CAT reaped a net profit of only 1.26 billion baht.
Both CAT and TOT were forced to make new business plans two years ago in order to turn around their failing operations, but those plans have not led to any decisive action:
With
no direct guidelines
from the minister, only routine
business plans are being implemented.
Major projects remain unapproved due to boardroom politics.
CAT's poor performance worsened last year, below the minimum targets set in its turnaround plan. There was growing concern among staff that CAT could face a similar crisis as Thai Airways.
TOT and CAT both are scheduled to hold meetings today, when proposals to replace their respective boards whose terms expire on that date, will be tabled.
Major projects remain unapproved due to boardroom politics.
CAT's poor performance worsened last year, below the minimum targets set in its turnaround plan. There was growing concern among staff that CAT could face a similar crisis as Thai Airways.
TOT and CAT both are scheduled to hold meetings today, when proposals to replace their respective boards whose terms expire on that date, will be tabled.
This week's Post Database reported on some of the projects happening at CAT:
Your
TOT
president Varut Suvakorn said he was committed to launching 3G
yuppiephone
service this year for a modest 20 billion baht, but there
was just so much red tape
and problems with funding and so on. Instead,
he will just take the 3-billion-baht
budget package to upgrade
500 of
the current base stations
to 3G standards, on the basis that some 3G is
better than none; industry experts said Mr Varut was just kidding
anyhow, because an actual, real and authentic
3G network will take 40
billion baht for starters.
Mr Varut also announced the scheme
to follow
the master plan
of the Information Communication Technology Ministry to
upgrade the current "2G" mobile phone network by August also won't
happen..(Source: Post
Database)
Failing CAT resembles failing US automobile manufacturers in one respect: the power of labour unions within the organisation. Failing companies usually have to act against the wishes of unions and reduce pay and benefits. Despite a worsening financial situation at CAT the union seems to be growing more powerful:
CAT
unionists asked to meet the minister on Feb 16 but the request was
initially rejected.
She finally agreed when more than 100 CAT and TOT union members surrounded her at the ICT office, and demanded she fix a date to visit their offices to discuss policy.
However, the minister has not kept her promises.
The CAT union said its organisation still lacks a president and suffers from internal conflicts between its board and senior management.
The union wants the board to replace the deputy president Nithit Mongkolpattanakul, who was appointed in January, over what they say is a conflict of interest. He holds three positions, chief of the executive committee, deputy president and board member. He also has authority to endorse procurements worth up to 400 million baht.
She finally agreed when more than 100 CAT and TOT union members surrounded her at the ICT office, and demanded she fix a date to visit their offices to discuss policy.
However, the minister has not kept her promises.
The CAT union said its organisation still lacks a president and suffers from internal conflicts between its board and senior management.
The union wants the board to replace the deputy president Nithit Mongkolpattanakul, who was appointed in January, over what they say is a conflict of interest. He holds three positions, chief of the executive committee, deputy president and board member. He also has authority to endorse procurements worth up to 400 million baht.
Vocabulary:
CAT Telecom - CAT Telecom Public Company Limited is the Thai state-owned telecommunications company that owns Thailand’s international telecommunications infrastructure including its international gateways, satellite and submarine cable networks connections. Until recently, CAT had a monopoly on international telephony and CDMA mobile telephony. CAT partners with sister state-enterprise TOT to provide a GSM mobile service and with Hutchison to provide a CDMA mobile service. Corporatized in July 2003, CAT Telecom used to be known as the Communications Authority of Thailand (See Wikipedia)
TOT - a Thai state-owned telecommunications company. Originally established in 1954 and corporatized in 2002, TOT used to be known as the Telephone Organization of Thailand and TOT Corporation Public Company Limited. TOT's main line of business is fixed line telephony, although it has several other businesses, including mobile telephony. (See Wikipedia)
antiquated - old, old-fashioned, and out-of-date
gigantic - very very big
telecoms, telecommunications - communication by telephone and radio
an enterprise - a large company
a state enterprise - a government owned company
a telecom - a telecommunications company
a function - the useful thing that something or some person does
3G - third generation mobile phone, the next level of mobile phone services beyond the current second generation (2G), supports broadband internet, supports greater numbers of voice and data customers especially in urban areas (See Wikipedia on 3G)
3G licenses - official permission from the government to offer 3G mobile phone services, to run a 3G business
whopping - very very large
doing essentially nothing - doing something that is not useful (the same use as doing nothing)
the mother of all Y - the biggest one in group Y (the mother of all battles, for example, Saddam Hussein's famous phrase)
concessions - official permission from the government to do a certain type of business
a concession fee - money paid to the government for a concession
international direct dialling (IDD) - an international telephone call dialled by the caller rather than going via an operator (See Wikipedia)
VOIP - technologies for delivery of voice communication over the internet (IP networks) (See Wikipedia and comparison)
Skype - the most popular internet telephone service worldwide (See Wikipedia)
Yahoo Messenger (YM) - the most popular internet chatting service (See Wikipedia)
webcam - a small camera mounted on a computer for use on the internet (See Wikipedia)
reap a profit - make a profit, have a positive profit
business plans - a statement of business goals and a plan for reaching those goals (See Wikipedia)
a turn around - when a business goes from failing to not failing
a turn around plan - a plan to turn a failing business into a successful business once again
decisive - making it certain to gain certain results (examples: a decisive victory, a decisive meeting, the final decisive stage of the campaign)
guidelines - advice to guide actions, to who people how to do something, in a general sort of way
routine (adjective) - ordinary, not different
implemented - when a plan is put into action, actually doing the things in a plan
the board, the board of directors - the highest group of people in a corporation who make high-level policy for a company
the boardroom - the place where the board meets
boardroom politics - politics among the board of directors
a growing concern - a business that is growing and getting bigger
a yuppie - a young person with a well-paying job who likes to show off the expensive things they own
yuppiephone - an expensive phone (gadget) that a yuppie would buy and show-off
red tape - all the formal paperwork and permissions and procedures that you need
a budget package - a less expensive package, a cheap package
upgrade - improve a system
base stations - the loca antenna that connects mobile telephones in an area with a company's mobile phone network, most countries require several hundred base stations to give full coverage for mobile phone customers
just kidding - just a joke (don't really mean what you say)
authentic - the real thing, not a fake
for starters - to begin, the first thing they will do
a scheme - a plan for doing something
the master plan - the highest level plan that guides lower level planning
unions, labour unions - an organisation for the employees of companies that tries to gain better pay and benefits (health insurance, retirement, etc) for them
benefits - special things that employees receive in addition to their salary
kept her promises - did what she promised to do
internal conflicts - when employees or groups within an organisation have disagreements and arguments
senior management - the presidents and vice presidents of a company
authority to Y - he is allowed to do Y, he has the necessary power and position to do Y
endorse - approve
procurements - purchases
(Source #1: Bangkok Post, Database, lese-majeste-on the web, link)
(Source #2: Bangkok, 20/04/09, 'Powerless' ICT minister refuses to meet with TOT and CAT, KOMSAN TORTERMVASANA, link)
