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Red Tape Snags 3G Plan

August 5, 2008

By Komsan Tortermvasana, Bangkok Post, Thailand

Aug. 4–The plan by TOT Plc to invest 30 billion baht to launch third-generation (3G) mobile-phone services within one year is likely to be delayed by politics and red tape, chairman Teerawut Boonyasopon admits.

The state telecom enterprise wants to build an extensive network of 5,200 base stations and rent it out to other operators to use, but several hurdles stand in its way.

Mr Teerawut said TOT had proposed the project to the Information and Communications Technology (ICT) ministry, which must then seek approval from the Finance Ministry, the National Economic and Social Development Board, the Office of the Public Debt Management and the cabinet.

Only after it receives cabinet approval can TOT begin to draft terms of reference and call an electronic auction for equipment.

However, the current political uncertainty made it difficult to forecast how much progress could be made, he said.

Mr Teerawut said that TOT aimed to take a comprehensive approach to 3G, compared with private operators who have been taking only tentative steps to upgrade their networks.

TOT had earlier assessed the internal rate of return or IRR of the project at 20.1 percent with a payback period of seven years and five months.

The state enterprise wants to install 5,220 base stations, including 2,500 in Bangkok, between 2008 and 2012, at a total cost of 29 billion baht in total.

It expects to have 350,000 users in the first year of operation, increasing to four million in 2013. It aims capture a 15 percent share of the 3G service market with revenue of at least 10 billion baht a year.

TOT deputy president Varut Suvakorn said that since the investment was huge, TOT might need to look for long-term funds on a government-to-government basis, as current lending interest rates were high, at 6-7 percent.

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