TRIS Rating Co., Ltd. announces today that the recently heightened level of regulatory risks in the telecoms industry has not yet pronounced any immediate impacts on the credit ratings and outlooks of the telecoms operators under its portfolio: Shin Corporation PLC (SHIN), Advanced Info Service PLC (ADVANC), Total Access Communication PLC (TAC), and TRUE Corporation PLC (TRUE).
With regard to the petition filed by TAC against TOT PLC (TOT) with the Administrative Court over TOT’s decision to block access by three million new TAC and True Move numbers, the Ministry of Information and Communications Technology (ICT) is reported to already intervene the matter and TOT agreed to unblock its network. TRIS Rating believes although TAC and True Move resolved the issues with TOT quickly, a real remedy on access charges seems unlikely to be reached soon.
In addition to the access charge disputes, on 9 January 2007, the Cabinet approved the principal amendments to the 1999 Foreign Business Act that prohibit foreigners to hold more than 50% of the shares or voting rights in certain type of businesses. If the law is enacted, SHIN, ADVANC, and TAC will face the possibility of restructuring their shareholdings.
TRIS Rating will closely monitor the situation and any implications that may lead to changes in telecoms operators’ credit ratings.
The telecoms operators in TRIS Rating’s portfolio are SHIN with a “AA-” company rating and a “stable” outlook, ADVANC with “AA” company and issue ratings and a “stable” outlook, TAC with “A” company and issue ratings and a “stable” outlook, as well as TRUE with “BBB” company and issue ratings and a “positive” outlook. — End
(See below for the overview of the ongoing disputes on the Interconnection Charge regulation)
Overview of the Ongoing Disputes on the Interconnection Charge Regulation
The access charges disputed have begun after the National Telecommunications Commission (NTC), an independent Thai telecoms industry regulator, published the Interconnection Charge (IC) regulation in the Royal Gazette in May 2006. The IC law aims to reform and liberalize the Thai telecoms industry. Under the IC law, telecoms operators are required to enter bilateral agreements on the IC rates and gradually switch their operations toward the IC regime, where calling tariffs will be split among originating, receiving, and intermediary parties. In addition, telecoms operators must allow other operators to connect with their networks and ensure fair competitive environment.
In November 2006, TAC and True Move reached an agreement on the IC rates. Both operators believed that the IC law overruled access charges contracts that they previously signed with TOT; thus, they would no longer require to paying access charges to TOT. However, TOT has demanded that TAC and True Move continue to pay access charges regardless of the IC implementations. The unresolved problems arise from the IC framework, which fails to clearly address how to resolve crucial issues relating to access charges and concession conversions. NTC maintains that the conflicts are matters between state enterprises and their concessionaires. The regulator denies the responsibility to mediate the issues, but rather, encourages all parties to arrive at the resolutions themselves. On 17 January 2007, TOT cited that TAC and True Move owed Bt3.54 billion of access charges, with a deadline on 18 January 2007. TOT has no choice but to refuse the network connection of the three million numbers belonging to TAC and True Move. The three million new numbers were granted to TAC and True Move, at 1.5 million numbers each, by NTC in November 2006. TAC filed the lawsuit on 17 January 2007 to seek an emergency protection in response to the TOT’s plan to block its fixed-line network. A special hearing at the Administrative Court is set on 18 January 2007. On 18 January 2007, the ICT Ministry ordered TOT to open its network as it would be illegal and TOT agreed to do so.
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With regard to the petition filed by TAC against TOT PLC (TOT) with the Administrative Court over TOT’s decision to block access by three million new TAC and True Move numbers, the Ministry of Information and Communications Technology (ICT) is reported to already intervene the matter and TOT agreed to unblock its network. TRIS Rating believes although TAC and True Move resolved the issues with TOT quickly, a real remedy on access charges seems unlikely to be reached soon.
In addition to the access charge disputes, on 9 January 2007, the Cabinet approved the principal amendments to the 1999 Foreign Business Act that prohibit foreigners to hold more than 50% of the shares or voting rights in certain type of businesses. If the law is enacted, SHIN, ADVANC, and TAC will face the possibility of restructuring their shareholdings.
TRIS Rating will closely monitor the situation and any implications that may lead to changes in telecoms operators’ credit ratings.
The telecoms operators in TRIS Rating’s portfolio are SHIN with a “AA-” company rating and a “stable” outlook, ADVANC with “AA” company and issue ratings and a “stable” outlook, TAC with “A” company and issue ratings and a “stable” outlook, as well as TRUE with “BBB” company and issue ratings and a “positive” outlook. — End
(See below for the overview of the ongoing disputes on the Interconnection Charge regulation)
Overview of the Ongoing Disputes on the Interconnection Charge Regulation
The access charges disputed have begun after the National Telecommunications Commission (NTC), an independent Thai telecoms industry regulator, published the Interconnection Charge (IC) regulation in the Royal Gazette in May 2006. The IC law aims to reform and liberalize the Thai telecoms industry. Under the IC law, telecoms operators are required to enter bilateral agreements on the IC rates and gradually switch their operations toward the IC regime, where calling tariffs will be split among originating, receiving, and intermediary parties. In addition, telecoms operators must allow other operators to connect with their networks and ensure fair competitive environment.
In November 2006, TAC and True Move reached an agreement on the IC rates. Both operators believed that the IC law overruled access charges contracts that they previously signed with TOT; thus, they would no longer require to paying access charges to TOT. However, TOT has demanded that TAC and True Move continue to pay access charges regardless of the IC implementations. The unresolved problems arise from the IC framework, which fails to clearly address how to resolve crucial issues relating to access charges and concession conversions. NTC maintains that the conflicts are matters between state enterprises and their concessionaires. The regulator denies the responsibility to mediate the issues, but rather, encourages all parties to arrive at the resolutions themselves. On 17 January 2007, TOT cited that TAC and True Move owed Bt3.54 billion of access charges, with a deadline on 18 January 2007. TOT has no choice but to refuse the network connection of the three million numbers belonging to TAC and True Move. The three million new numbers were granted to TAC and True Move, at 1.5 million numbers each, by NTC in November 2006. TAC filed the lawsuit on 17 January 2007 to seek an emergency protection in response to the TOT’s plan to block its fixed-line network. A special hearing at the Administrative Court is set on 18 January 2007. On 18 January 2007, the ICT Ministry ordered TOT to open its network as it would be illegal and TOT agreed to do so.
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