BANGKOK, Thailand-The Asian financial crisis is imposing a brutal shakeout on the Thai telecommunications sector, turning Darwin’s law about the survival of the fittest into an apt description of the future state of the industry here.
With the nation’s economic turmoil entering its second year and no end in sight, several hard-hit wireless networks have been forced to shut down.
They’re victims of a currency that has dropped 60 percent in value; a stock market that has plunged from its peak at 1,400 points to now only 200 points in the year-long currency meltdown; widespread corporate and personal bankruptcies; and a virtual halt in bank lending.
One unlucky victim has been RadioPhone Co. It recently signed an agreement with state-owned Telephone Organization of Thailand (TOT) to cease its business and hand over its trunked radio operation. A joint venture of major fixed-line interests, RadioPhone turned in 7,791 trunked mobile handsets for which it had provided service since 1993.
Several marketers insisted trunked radio service had good potential in Thailand, but that RadioPhone lacked the experience to run it. A former RadioPhone senior executive countered that the trunked radio system is technically flawed and the market had contracted sharply in the economic crunch.
“Many industrial plants, which were our major customers, closed down,” the executive said. “There was no demand for the service.”
RadioPhone had spent about Bt300 million (US$7.1 million) to install 63 cell sites. TOT was given a royalty fee for awarding the license of only Bt46 million (US$1.09 million) after the network shut down.
RadioPhone’s competitor, WorldRadio, which is run by Ucom Group, continues to struggle. As the sole remaining trunked radio service provider, WorldRadio is expected to reap more transport customers and has no plans to bow out of the business. WorldRadio is used by many Bangkok taxi drivers.
TOT’s neighboring state carrier, the Communications Authority of Thailand (CAT), also has lost concessionaires.
Following a flexible-but-unrealistic practice of allowing unbridled competition in the VSAT (very small aperture terminal) market, the CAT imposed a high royalty fee rate on new VSAT players.
Only three VSAT operators out of six will be around by the end of this year, said Ruangsub Kovintha, president of Samart Telcoms Plc. Samart, which controls the largest market share, also is suffering like everyone else, but will survive thanks to its large subscription base, he said.
He declined to name the troubled operators, but U-Sat ended operations earlier this year, and the industry consensus has it that new licensees Siam Sat and WorldSat are in similar financial straits as U-Sat was when it folded.
The CAT also said goodbye to one of its cellular licensees, Wireless Communications Services (WCS), an operator of a PCN 1800 network. WCS announced in the second quarter it would temporarily suspend its network operation in the quarter, but given that the company could no longer repay its loans, particularly to its vendor Northern Telecom Ltd., no one sees WCS resuming operations.
The Canada-based equipment supplier is likely to book Bt5 billion (US$118.5 million) in lost income. Former WCS head Suradet Mukyangkurn said he had no idea when WCS would restart operations. About 7,000 customers, the company claimed, already had transferred to its affiliated company, Total Access Communication, the country’s second-largest cellular operator.
Bangkok-based analysts predict that major cellular operators, including Advanced Info Service, are losing about 4,000 to 5,000 subscribers per month.
