True-CAT deal condemned by Thai Auditor-General

10 Dec 2015
00:00

Thailand’s Office of the Auditor-General comes down hard on True-CAT 850 deal; will pursue criminal and civil charges for over $1.2 billion of damages; operating licence may be revoked.

A report by the State Audit Commission under the Office of the Auditor General into TrueMove’s controversial 850 MHz 3G deal with state-owned CAT Telecom has identified at least $1.27 billion (45,852 million Baht) of damages as well as any number of rogue cell sites that have not been accounted for.

The report, which just happened to be published on International Anti-Corruption Day, focused on CAT Telecom’s accounts up to end of 2014.

True subsidiary RealMove was supposed to pay CAT $1.39 billion (49.86 billion baht) under the 850 3G contract last year but only paid $1.05 billion (37.665 billion baht). The $337 million (12.12 billion baht) is being negotiated and one year later, still has not been paid and CAT has not moved to recover interest on the money due.

True subsidiary BFKT, which is contracted by CAT to build the network, had missed the rollout target of 13,500 base stations on 31 December 2012 and according to the contract should have been fined $65 million (2.36 billion baht). However, CAT only fined True $56 million (2.02 billion baht) and even then, the fine has not been paid.

True (BFKT) has since rolled out in excess of 13,500 base stations and there has been no payments to CAT and no negotiations as to how to deal with the extra base stations.

Between April 2013 and August 2014 True (TrueMove 2G) had roamed its customers onto the 850 MHz 3G network and had not paid CAT $173 million (6.22 billion baht) in roaming fees.

True (RealMove 850) also roamed its customers onto TrueMove 2G 1800. This income should have been under the concession terms (30% revenue share). CAT did not call for any revenue share. The OAG report said that between 2011 to 2013 this accounted for damages of $44 million (1.58 billion baht) plus an unnecessary $647 million (23.28 billion baht) in overpaid tax because of it.

Finally the OAG identified $7.9 million (287.75 million Baht) in damages from work that True (Real Future) carried out before the contract was signed that was never invoiced by CAT Telecom.

Professor Chaisit Trachoetham, Chairman of the State Audit Commission Office of the Auditor General of Thailand, said a committee had been set up to identify individuals at CAT responsible for the losses so that further disciplinary action, civil lawsuits and criminal lawsuits may be taken.

The existence of any number of rogue cell sites is a clear indication that CAT is not in control of the spectrum and thus the 850 deal is a clear breach of section 46 of Thailand’s frequency act according to one telecom company executive speaking to TelecomAsia who asked not to be named.

Article 46 says licence holders must operate the network themselves while article 47 threatens breaches with a cancellation of the licence (Please see the "Thailand frequency act, 2010" at the bottom of the article). He also pointed out that section 79 would force the telecoms regulator to take action once they learn of this matter or risk themselves being prosecuted for criminal negligence.

Allan Rasmussen from consultancy Yozzo told TelecomAsia that the Auditor-General had finally called things for what they are - It is a clear indication that CAT is not in control of the spectrum nor of the business for that matter.

“Which begs the question should they be allowed to have spectrum? First thing is probably to send them off to school to learn how to make a invoice,” he said, exasperated.

“The True/CAT setup - although very confusing and mostly on the wrong side of intentions was the only positive wholesale/partnership story in Thailand the last couple of years but this new discovery has killed that positive vibe and will be a bomb under any other wholesale/partnership deals in Thailand post the 900/1800MHz auction.

“It was also OAG who (correctly) said no to TOT and i-mobile’s wholesale deal two years ago and now i-mobile is moving to CAT,” he noted.

TrueMove did not reply to a request for comment by the time of publication.

Thailand frequency act, 2010

Section 46. A spectrum license for telecommunications business is the exclusive rights of the licensee and is not transferable.

The licensee who has been authorized to use spectrum for telecommunications services shall carry out the services by himself or herself. Business management either in whole or in part shall not be rendered or permitted to other to act on his/her behalf.

Section 47. Any licensee who has been authorized to use spectrum for telecommunications services has not carried out the business by using such spectrum within period specified by the NBTC or by using such spectrum in other services not relating to its objectives or fails to comply with the business operation conditions, or conducts prohibitive acts as specified in Section 27 (11), or fails to comply with the provision of Section 46, the NBTC shall take action to rectify the situation or issue an order to revoke the spectrum license in whole or in part.

Section 79. Any NBTC competent official or person exercising NBTC power who becomes aware of or has been notified about unlawful use of the frequency in violation of, or not compliance with, this Act, and if the official fails to enforce the law and if the

act or refraining from such act is not an offense under Section 157 of the Penal Code, that NBTC competent official or person exercising NBTC power shall be liable to imprisonment for a term not exceeding three years or to a fine not exceeding sixty thousand Baht or to both.

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