CAT faces probe over 'questionable' Hutch deal

01 Sep 2006

Thailand's Office of the Auditor-General (OAG) has given CAT Telecom until the end of the month to submit documents on the operation of the Hutch mobile phone service after the transparency of the service contract was questioned.

The contract with Hong Kong-based Hutchison, its partner in the Hutch venture, could result in potential losses of up to 10 billion baht ($265.3 million) a year for CAT telecom, officials said.

Entering into an agreement that produces losses on such a scale for a state enterprise could be in violation of the laws governing public-private joint ventures.

A source in CAT Telecom said that the OAG sent a note to CAT Telecom to inquire about its contract with Hutchison for providing the CDMA phone service in 25 central provinces including Bangkok.

Under the public-private joint-venture law, profits are supposed to be split equally. But CAT Telecom is receiving only 20% from Hutchison CAT Wireless Multi Media, the joint venture between Hutchison and CAT Telecom.

OAG officials said that Hutch was losing money while BFKT, a separate service unit controlled by Hutchison, never contributed any profit to CAT Telecom, which should have received at least 7.9 billion baht ($209 million) a year as a minimum guarantee for the service.

Hutch has only about 800,000 subscribers in a mobile phone market of 32 million.

The OAG also asked CAT Telecom board chairman Kraisorn Pornsutee to submit all the documents that CAT Telecom had signed with BFKT, Hutchison CAT Wireless Multi Media.

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