CAT-TOT survival plan: Consolidate businesses, no merger
Do-or-die situation for state telecom monopolies, must combine common businesses & shed staff by early retirement.
Do-or-die situation for state telecom monopolies, must combine common businesses & shed staff by early retirement.
TELECOMMUNICATIONS
CAT-TOT survival plan: Consolidate businesses, no merger
21/07/2016
Komsan Tortermvasana
TOT and CAT are operating under a so-called "survival plan" by focusing on core businesses and terminating business areas that do not make a profit.
The State Enterprise Policy Commission or "superboard" has ordered both companies to restructure their organisations and businesses in order to survive in the future when they will not be able to support themselves from payments from mobile phone companies such as DTAC and AIS (the post- concession era).
Both TOT and CAT face a " do-or-die " situation and they must quickly adjust their organisational and business structures in order to survive, according to the Information and Communication Technology (ICT) minister Uttama Savanayana.
NO COMPLETE MERGER OF CAT & TOT
There will be no complete merger between the two state telecom enterprises TOT and CAT Telecom because of their different organisational structures and business units, according to the ICT) minister.
CAT & TOT will partly, however, consolidate some of their similar core businesses in order to eliminate duplicate investments and keep up with a changing marketplace.
ONLY CONSOLIDATION OF THREE CORE BUSINESSES
The superboard recently approved in principle proposals on the consolidation of three core businesses -- transmission and fibre-optics networks, sub-marine cable networks, and internet data centres -- submitted by the boards of the two state enterprises.
"There will only be three business combinations, with the other core areas [including fixed-line broadband internet, mobile phones and telecom towers and network rental services] remaining untouched," said Mr Uttama.
TOT and CAT might have to form separate joint ventures to manage and operate the combined businesses.
NO STAFF LAY-OFFS DESPITE LOSSES
The ICT Ministry also has no plans to lay off any of the permanent staff of TOT or CAT, but there are plans for staff reduction through early retirement (see below).
TOT has 15,000 employees, while CAT has almost 6,000.
TOT posted a loss of 480 million baht on consolidated revenue of 12.9 billion baht in the first half of 2016.
The state enterprise expects to face a loss of 4 billion baht this year, a reversal of its earlier prediction of a profit of 4 billion baht.
EARLY RETIREMENT PLAN & AIS SHARED REVENUE TO ALLEVIATE LOSSES
The anticipated loss is mainly due to to delays in a partnership deal with Advanced Info Service (AIS) in which AIS will provide mobile phone service to a network owned by TOT.
An early retirement program TOT is offering to its 1,300 employees will also cost TOT 3 billion baht this year.
TOT expects to face an operating loss of 1 billion baht for 2016.
TOT earlier projected a gain of 9.5 billion baht in additional revenue from its deal with AIS to provide mobile service on TOT's 2100-megahertz spectrum.
TOT's board approved AIS as a strategic partner to provide mobile service on the spectrum in November last year, but a memorandum of understanding (MoU) has yet to be .
http://www.bangkokpost.com/business/telecom/1040445/no-tot-cat-merger-plan-says-uttama
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