DTAC

In Thailand, Total Access Communication PCL (DTAC) was established in 1989.Telenor became a shareholder of DTAC in 2001. DTAC offers mobile voice, roaming and value-added services to its customers through contract and prepaid tariff plans. DTAC was listed on the Stock Exchange of Thailand (the SET) on 22 June 2007 and became the only Thai company listed on both the Singapore Stock Exchange and the SET. As at 31 March 2011, Telenor had an economic interest in DTAC of approximately 65.5%. As at 31 March 2011, DTAC was the second largest mobile communications provider in Thailand, with an estimated subscription market share of 30% or 22.3 million mobile subscriptions. Of these subscriptions, 90% were on prepaid tariff plans. As at 31 March 2011, the mobile penetration and number of inhabitants in Thailand were 103% and 71 million, respectively.

Network and licences

Currently DTAC operates on GSM 1800 MHz and AMPS 800 MHz concessions from CAT Telecom Public Company Limited (CAT) (formerly the Communication Authority of Thailand). The concessions expire in 2018. In addition, DTAC was awarded an international gateway type three licence in February 2007. DTAC started a non-commercial trial of 3G services based on HSPA technology on its existing 850 MHz frequency on 31 August 2009. In December 2010, DTAC got the approval from CAT to expand the non-commercial trial of 3G services from the current 36 base stations up to 1,220 base stations.

Competition

In early 2007, the implementation of interconnection charges reshaped the Thai telecom industry. The operators, after entering into an interconnection agreement, adjusted to the new environment by offering differentiated off- and on-net tariffs. Following implementation of the interconnection agreement, prices have remained fairly stable. As at 31 March 2011, the market leading mobile operator in Thailand was Advanced Info Service plc (AIS), with an estimated market share of 44%. The other mobile operators in Thailand are True Move, with a market share of approximately 24%, and Hutchinson-CAT Wireless Multimedia (which was acquired by True Corp in January 2011) and Thai Mobile, with a combined market share of 2%.

Regulatory matters

DTAC has a concession arrangement whereby CAT has granted DTAC the right to build, transfer and operate a mobile network in Thailand. In return for the right to provide mobile services for a fixed period, mobile operators must develop their infrastructure, and then transfer ownership of the infrastructure to the government and pay a concession fee, or revenue share, to CAT. The revenue share payable to CAT was increased from 20% to 25% in September 2006, and will be further increased to 30% in September 2011.

On 17 May 2006, the National Telecommunications Commission (NTC) issued the Notification on Use and Interconnection of Telecommunications Network of 2006 (Notification) applicable to telecommunication licensees with their own telecommunication network, requiring the licensees to interconnect with each other on request. The interconnection provider is entitled to apply an interconnection charge that reflects its costs.

A new interconnection framework for Thailand became effective on 18 May 2006 for all licensed operators and those operating under concessions in Thailand. Due to this change in Thai law as well as its effect on prior agreements, DTAC, as well as all other licensed operators in Thailand, made submissions to the NTC Reference Interconnection Offer (RIO), which provides for bilateral negotiations  on  interconnection  prices  among  fixed  and  mobile  operators  in Thailand. On 17 November 2006, DTAC served notice on TOT Plc (TOT) (formerly “The Telephone Organisation of Thailand”, the state-owned fixed line operator) and CAT stating that the prior access charge agreements had been amended to reflect the new NTC-approved RIO rates and that DTAC was no longer required to pay the rates agreed to under the Access Charge Agreement previously entered into with TOT. Following the submission of the notice to TOT and CAT, the rate to be paid under the Access Charge Agreements was to be either a rate agreed by the parties in accordance with the RIO or an interim rate to be announced by the NTC.

Following the cessation by DTAC of the payment of the access charges at the rates specified in the Access Charge Agreement, TOT refused to allow DTAC’s subscribers to connect to its subscribers. DTAC then filed a lawsuit against TOT before the Central Administrative Court. The Central Administrative  Court  issued  an  injunction  order  in  DTAC’s  favour,  requiring TOT  to  allow subscribers of the two networks to interconnect. On 26 February 2009, the Central Administrative Court issued its verdict in DTAC’s favour, stating that DTAC is a telecom operator with the right to be assigned new telephone numbers by the NTC, and that DTAC has the right to continue its business under the concession. TOT filed an appeal against this verdict. The matter is now under the consideration of the Supreme Administrative Court. In addition to this, DTAC filed a complaint before the NTC seeking an administrative order against TOT. The NTC issued an order in DTAC’s favour requiring TOT to allow DTAC’s subscribers to interconnect with TOT’s subscribers. TOT brought a lawsuit in the Central Administrative Court challenging this NTC order. On 9 October 2009, the Central Administrative Court delivered its verdict, stating that the NTC’s order was issued in compliance with the law, and that DTAC has the right to be assigned new telephone numbers by the NTC as it is a telecom operator under the concession.

On 19 June 2007, the NTC ordered TOT to conclude an interconnection agreement with DTAC within 30 days. On 9 August 2007, TOT filed a lawsuit against the NTC and the Secretary-General of the NTC before the Central Administrative Court to seek a revocation by the Court of the orders of the NTC requiring TOT to negotiate an interconnection agreement with DTAC. On 5 September 2007, the Secretary-General of the NTC issued an order requiring TOT to comply with the order of the NTC. Subsequently, the Secretary-General of the NTC issued an order imposing a fine on TOT of THB 60,000 (approximately NOK 11,000) per day, commencing from 1 February 2008, for its non-compliance with the NTC’s order. TOT filed a petition to the Central Administrative Court requesting that the Central Administrative Court suspend the fine. On 7 May 2008, DTAC received the Central Administrative Court’s order rejecting TOT’s petition. The Court ruled that TOT and DTAC already interconnected their telecommunications networks under the existing Access Charge Agreement between TOT, CAT and DTAC. As such, the Central Administrative Court said that TOT and DTAC should negotiate an agreement with binding effect in relation to technical interconnection and the expenses to be paid to each other for such interconnection. Furthermore, the Central Administrative Court concluded that the NTC’s order also conformed with the order of the Supreme Administrative Court requiring TOT to allow DTAC’s subscribers, using numbers allocated by the NTC, to be connected to TOT’s subscribers. The Central Administrative Court was, therefore, of the view that the injunction sought by TOT could not be granted as it would impair state administration and public service. The Central Administrative Court dismissed TOT’s petition. Such an order of the Central Administrative Court cannot be appealed.

Separately, on 16 November 2007, TOT filed a lawsuit before the Civil Court against CAT, as the first defendant, and DTAC, as the second defendant. TOT demanded payment by CAT and DTAC of overdue access charges, including default interest and value added tax for the total amount of THB 11,705,066,637 (approximately NOK 2.3 billion). TOT also requested the Civil Court to issue an order requiring both CAT and DTAC to continue paying the access charges to TOT under the Access Charge Agreements. DTAC submitted its statement of defence and filed a petition to the Civil Court for its opinion on the jurisdiction of the Civil Court over this case. The Civil Court was of the view that the case fell under the jurisdiction of the Central Administrative Court. On 3 November 2008, the Central Administrative Court ruled that it had jurisdiction over this case. The Civil Court then dismissed the case, and asked TOT to re-file it at the Central Administrative Court if TOT still wished to pursue the claim relating to the access charge. DTAC has not been informed by the Central Administrative Court of whether TOT has submitted the case against DTAC before the Central Administrative Court.
In December 2010, the Frequency Allocation Act B.E. 2553 (the Act) was published in the Royal Gazette, paving the way for the establishment of the National Broadcasting and Telecommunication Commission (NBTC), a new regulator for both telecom and broadcasting industries. The selection process of the 11-member NBTC is now ongoing and, according to the law, has to conclude within 180 days of the enactment of the Act.

As described in “Network and licences” above, DTAC operates under a concession right to operate and deliver mobile services in Thailand granted by the CAT. The concession originally covered a 15 year period, but the agreement was amended on 23 July 1993 and 22 November 1996, with the concession period being extended to 22 and 27 years, respectively. Accordingly, the concession period under the existing agreement expires in 2018. In February 2011, the Cabinet in Thailand appointed a committee to negotiate with mobile operators regarding amendments to the mobile operators’ concession  agreements,  alleging  that  CAT  and  the  Ministry  of  Information  and Technology did not have the required Cabinet approval for the amendments. At present, the final conclusion of the Cabinet or the way the Cabinet would exercise its discretion on this matter is still unknown to the Telenor Group. However, the Telenor Group believes the amendments were entered into in good faith, that the amendments are legitimate and that the Thai state was not harmed by the amendments.