Bloomberg News

Thai 3G Plan Could Be Derailed by ‘Conspiracy,’ Wichian Says

October 02, 2011

(Updates with share performance in sixth paragraph.)

Oct. 3 (Bloomberg) -- Thailand’s six-year struggle to sell licenses for third-generation wireless services may be derailed by politics, said Wichian Mektrakarn, head of the phone company founded by exiled leader Thaksin Shinawatra.

Advanced Info Service Pcl, operator of the nation’s biggest mobile-phone network, and rivals Total Access Communication Pcl and True Corp. Pcl began offering limited 3G services earlier this year. Advanced is reluctant to invest more until the government auctions licenses and sets rules for operating the service, Wichian said in an interview in Bangkok.

“I believe there is still some kind of conspiracy, or some kind of movement to try to stop or delay 3G,” said Wichian, 57, who took over as CEO from Yingluck Shinawatra, Thaksin’s sister and Thailand’s current prime minister. “There are still a lot of obstacles. Anything can happen in Thailand.”

Thailand first planned to auction 3G licenses in 2005, a year before Thaksin’s sale of his telecommunications empire to Singapore’s Temasek Holdings Pte sparked protests that culminated in the military coup that ousted him. Another failure could see Thailand fall further behind nations including China and Malaysia that are already moving toward fourth-generation mobile networks.

“Transparency is poor, and vested interests, that could be hurt by the licensing, remain,” said David Beller, a Bangkok- based analyst for Royal Bank of Scotland Group Plc, who has a “buy” rating on Advanced Info. “There will be a number of hurdles to pass.”

Advanced Info shares fell 2.3 percent to 125 baht as of 10:05 a.m. Bangkok time, poised for their biggest drop in a week. Total Access slid 2.7 percent to 72 baht and True Corp. slumped 5.1 percent to 3 baht.

Court Challenges

A Thai court last year blocked an auction for 3G licenses after state-run CAT Telecom Pcl sought an injunction claiming the regulator didn’t have the authority to conduct the sale. Three licenses were scheduled to be auctioned, with bidding starting at 12.8 billion baht ($410 million) each.

Thailand’s mobile-phone companies are offering limited 3G services using upgraded 2G networks they operate under concessions from state companies CAT and TOT Pcl. The state firms have used legal challenges to impede the liberalization of the industry before a change in 2013 that will see revenue from concession holders flow to the government instead.

True Corp., the third-largest mobile-phone operator, plans to build a 3G network by 2013 in a venture with CAT Telecom, the company said in August. Thailand’s National Anti-Corruption Commission is scrutinizing the deal after rivals claimed it allows True to bypass the auction process, the Bangkok Post reported Sept. 14.

New Regulator

“If politics and benefits won’t come in the way, the 3G deal would have run smoothly,” said Suranan Wongwitthayakamchon, a member of the National Telecommunication Commission. “But those two factors always emerge as key obstacles. There are those who will lose benefits if the new licenses for 3G are allocated, including the two state telecom agencies.” The NTC is acting on behalf of the new regulator.

The Senate this month chose 11 members of a new regulator, the National Broadcasting and Telecommunications Commission, who must receive royal endorsement before starting work on the framework for the sale of 3G licenses. It may take another year before carriers can start offering 3G services even after licenses are awarded, Wichian said in a Sept. 28 interview.

Data Revenue

The three private operators are counting on mobile Internet to spur revenue from users of smartphones such as Apple Inc.’s iPhone and Research In Motion Ltd.’s Blackberry. Data revenue accounts for about 19 percent of Advanced Info’s total turnover, Wichian said. Data makes up less than 10 percent of total revenue at Total Access, CEO Jon Eddy Abdullah said in an interview this month.

Thailand’s plan to start nationwide 3G services next year may face further delays as political threats to the nation’s two-month-old government re-emerge, Wichian said.

“This is Thailand, and some unbelievable forces can come in and can change the whole thing,” he said.

Yingluck’s government plans to submit a petition to King Bhumibol Adulyadej asking him to grant a royal pardon to Thaksin, who has lived overseas since fleeing a 2008 jail sentence for abuse of power. Bringing Thaksin back too soon may reignite protests that could lead to another coup, Wichian said.

Airport Seizure

Protests erupted in 2008 when Thaksin’s opponents seized airports and government buildings to help oust his allies the last time they held power. The military cited a threat to the monarchy when toppling Thaksin in 2006. More than 90 people were killed last year in clashes between the army and pro-Thaksin protesters known as the Red Shirts.

Thaksin’s sister Yingluck entered politics seven weeks before her party won a majority in elections in July. Before that, she held senior positions at Advanced Info and SC Asset Corp., a property developer owned by Thaksin’s children.

Advanced Info’s parent company, Shin Corp. Pcl, has distanced itself from the Shinawatra family since the 2006 sale to Temasek, rebranding itself in April as Intouch.

A Temasek-led group bought 49.6 percent of Shin in 2006 from then-premier Thaksin and later raised its stake to more than 96 percent, sparking protests and a boycott of Shin products.

Thaksin’s opponents accused him of selling state assets to a foreign government, and he temporarily stepped down as premier in April that year amid accusations his family improperly avoided paying tax on the windfall. He was ousted in a military coup five months later.

Green Card

Wichian’s first brush with politics came in 1976, when he joined a left-wing student movement and left Bangkok to spend 18 months in southern Thailand, where communists were waging a guerilla war against the government.

Wichian moved with his family to the U.S. soon after.

“I went for 14 days, but since my dad applied for a green card, I stayed 14 years,” Wichian said.

Wichian gained a bachelor’s degree in electrical engineering from California Polytechnic State University, Advanced Info said when he was appointed as CEO. He also worked with airborne radar systems for Hughes Aircraft and with AT&T Inc.’s Thai unit. He joined Advanced Info in 1995, and became CEO in 2006 after a five-month search for a replacement for Yingluck.

Wichian said he hasn’t spoken to his former boss since she started running the country of 66 million people in August.

“A lot of people ask me what do you want from the new government, and I say just a clear direction in terms of national broadband policy and a fair treatment to everyone to be able to compete in the market equally and fairly,” he said. “That’s all we need, because we are quite strong already.”

--With assistance from Suttinee Yuvejwattana, Daniel Ten Kate and Anuchit Nguyen in Bangkok. Editors: Anand Krishnamoorthy, Terje Langeland

To contact the reporter on this story: Tony Jordan in Bangkok at tjordan3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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