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TELECOMS:

New law has foreign firms reviewing their positions
 
E-payments of VAT begin here slowly by
Mongkol Jullayothin

Foreign partners in local telecommunications companies are examining their options in case they have to make changes to comply with the new telecommunications service law.

The law, which is expected to take effect early next year, limits foreign shareholdings in local telecom firms to 25%. While it was not retroactive, the law was vague on what would happen if operators converted their concessions with state agencies, said Grant Ferguson, chief financial officer of Total Access Communication PLC (TAC). In the conversion process, revenue-sharing concessions are to be replaced by licences, and existing operators will pay compensation to the state.

Telenor holds a 30% stake in TAC. If the Norwegian company's holding remains above 25% after TAC converts its concession, it would breach the law.

''Therefore, we need a clearer direction from the government on this issue before making any decision on concession conversion'', said Mr. Ferguson. ''As we want to convert the concession, we also need fair conditions to compete effectively as well.'' One alternative might be to set up a 100% Thai-owned holding company, of which TAC would become a subsidiary.

Mr. Ferguson said the law needed amendments to widen the opportunities for international investors.

Hirohisa Yamakawa, a director of Thai Telephone and Telecommunications, said the law would limit companies' ability to obtain needed capital.

"The bill is quite strange. While every country wants to open the market, Thailand is going to narrow it'', said Mr Yamakawa who represents Nippon Telephone and Telegraph which holds 12% of TT&T. TT&T is now looking for a new partner and capital of 5 billion Baht as part of a debt-restructuring plan.

Mr Yamakawa said NTT would wait and see before making any decisions about further investment in Thailand.

TT&T President Pisit Leeatham had said that the company might be limited to approaching American investors, as they could obtain equal treatment to Thais under the Treaty of Amity.

The only US-based telecom company serving as a strategic partner locally is Verizon, formerly Nynex, through its investment in Telecom Asia Corporation PLC.

CP Orange Co., TelecomAsia's cellular affiliate, has said the law would stifle choice and innovation while maintaining high prices. Paradai Theerathada, corporate affairs manager, said 
the law went against the global trend.

''China is a good example. It eased rules to persuade foreign companies to invest but Thailand, where there had been an investor-friendly policy for a long time, is going to move against the current'', he said.

Bangkok Post, October 24, 2001

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