State-owned Thai operator TOT pulled out of negotiations with market leader AIS over the possibility of forming a joint venture for tower infrastructure.
A 49:51 joint venture was proposed by AIS as a possible course of action after TOT’s 2G concession with the number one player expired on 30th September, but the state operator has now dismissed the move as being “not…the best course of action”.
AIS leads the Thai market with a 46% share, and had leased over 13,000 towers from TOT under the concession. However, TOT’s acting president Monchai Noosong has now called for AIS to honour the terms of the agreement and transfer all the towers back to TOT.
“We want AIS to transfer the towers and pay rental fees to us in exchange for tower use, instead of being our partner in jointly managing the infrastructure,” he said.
AIS’ initial concession, which allowed it to offer 2G services over the 900MHz band, was due to last 20 years. The government amended the terms 7 times, extending the length of the concession to 25 years and reducing the rate for revenue sharing to 20%. The Thai Supreme Court ruled in 2006 that the amendments constituted an abuse of power by the former Prime Minister Thaksin Shinawatra, who implemented the changes to benefit AIS – a firm that he founded.
TOT is attempting to win compensation from AIS to the tune of THB70 billion ($1.95 billion) for the reduced payments. However, AIS CEO Somchai Lertsutiwong has claimed that the amended terms followed similar changes to the concessions between operators dtac and True Move with their concessionary CAT Telecom. Lertsutiwong noted that the Council of State recommended in 2001 that TOT and AIS alter the terms of the prepaid concession.
As it stands, TOT is attempting to procure an interim injunction to prevent AIS from using the towers, while the Thai regulator has order AIS not to interrupt 2G services for its 2.4 million customers for the next 4 months.