State telecom firms TOT Plc and CAT Telecom Plc are of the opinion that becoming subsidiaries under the same holding company was the best option to merge their businesses.

Chamras Tantreesukhon, TOT's acting president, said that after discussing options regarding the state agencies' merger with CAT's acting president, Phisal Jorphochaudom, both had decided that the state enterprises should become subsidiaries of the same holding company.

The Finance Ministry, which owns both TOT and CAT would set up the holding company.

"The competition will be done away with and our employees won't be affected as much [as if the two companies were not linked under a holding company structure]," Chamras said.

The government recently urged both state agencies to merge and improve their competitiveness with private telecom operators. The move will also reduce redundant areas of their businesses, ranging from cellular to overseas call services.

TOT has 21,000 employees, compared with CAT's 5,700. TOT plans to reduce its staff to 13,000 by 2008 to boost its efficiency.

Industrialists said that it seemed to be the first time that the two state telecom agencies had seriously discussed merging, in an effort to survive in an era of more intense competition in the telecom market place.

"They may just realise that private telecom operators derive their strength from acquiring or merging with other operators," said one telecom industrialist, who asked for anonymity.

However, it remains to be seen if both can work cohesively. The government floated the merger idea in 2002 but the plan has not been realised due to its vacillating policy and protests from labour unions.

Both TOT and CAT are in the process of selecting new presidents. Furthermore, the entire CAT board of directors recently stepped down, reportedly due to pressure from the agency's labour union, which held the board responsible for CAT missing several of its business targets.

The Information and Communications Technology Ministry is expected to appoint a new board by the end of the month.

In a separate matter, TOT's board approved the purchase of asymmetric digital subscriber line (ADSL) broadband Internet access equipment worth Bt975 million as part of its plan to increase Internet subscribers to one million within this year and accommodate all of the new customers.

TOT has more than 150,000 broadband Internet subscribers.

The equipment will purchased via a special procurement. Under that method, TOT will not hold a bid, but purchase the equipment from five preferred vendors, NEC, Siemens, Ericsson, Alcatel and Huawei Technology.

Chamras said that if the state agency were to purchase the equipment using the traditional bidding method, it would delay its efforts to expand its market share.

Telecom Reporters

The Nation