Thai Government to Renegotiate Mobile-Phone Contracts

Thailand's government will ``renegotiate'' contracts of mobile-phone providers Advanced Info Service (ADVANC) Pcl, Total Access Communication Pcl (DTAC) and True Corp. after lawmakers said their extended concessions breached rules.

Thailand's Council of State, the government's legal advisory body, said the three mobile concessions were extended and conditions changed by government agencies without required Cabinet approval.

``We will need to renegotiate with them, but we will not cancel the concession contracts,'' Information and Communication Minister Sitthichai Pookaiyaudom told a seminar today in Bangkok. ``We will set up two committees to renegotiate with all of them. It should take two to three months to reach conclusions. We want to get it done within this government.''

Renegotiation may raise the revenue-sharing percentage, forcing Advanced Info, Thailand's biggest mobile-phone company, to pay the government more of its sales, according to Chirasit Vuttigrai, an analyst at DBS Vickers Securities (Thailand) Ltd. Chirasit today lowered Advanced Info's shares to ``hold'' from ``buy'' and cut its 12-month stock price target by 13 percent to 100 baht in a note to clients sent before Sitthichai's comments.

The government wants to standardize the revenue sharing agreements and concession lengths to create ``more transparency'' and a better ``environment for investment,'' Sitthichai said.

Revenue

Under the original concessions subsequently changed without Cabinet endorsement, the three mobile companies should now be paying the government 30 percent of revenue, he said.

Advanced Info currently pays 20 percent, and Total Access and True each pay about 25 percent, according to analyst reports, including from Prasit Sujiravorakul, an analyst with Capital Nomura Securities Pcl in Bangkok.

``If possible, I want all the revised contracts to be equal, creating level fields to all players as they are not equal now,'' Sitthichai said. ``I will not cancel and take over the contracts, even though we are authorized to do that. We don't want to create panic in the industry and interrupt the service.''

Advanced Info shares fell 4 baht, or 4.5 percent to 85 at 11:05 a.m. in Bangkok. True Corp. stock fell 0.25 baht, or 3 percent, to 8 baht. Total Access shares, which trade in Singapore, rose 6 Singapore cents, or 5.4 percent, to S$1.18.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net

To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net

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