The Shin chairman, a giant of the Thai business world, got the boot. You could sense the ending of an era.

For 15 years, selling mobile phones created more wealth for Thai entrepreneurs than any other business. Then, in four months, the two firms that had made most of this wealth sold out to foreign companies. What a drama.

Act 1: The Set-up. In 1990, the two telephone agencies under the Communications Ministry granted concessions to two private companies to install mobile-phone systems. TOT's client was AIS, the company of an unknown, debt-ridden computer salesman, Thaksin Shinawatra. CAT granted the contract to Boonchai Bencharongkul's UCOM (later DTAC), a 30-year-old company with a long track record in the communications business.

TOT and CAT were fierce rivals. To give their concessionaire a market advantage, TOT imposed a connection charge on all mobiles calling into a landline phone, but exempted AIS. This little kink gave AIS a guaranteed higher margin, and more funds to blast away the competition with saturation marketing. For the next 15 years, AIS did everything necessary to preserve this unfair advantage.

Phones were in huge demand because the economy was booming, while getting a landline required a long wait and a big bribe. The cosy duopolists could charge what they liked. The pair made Bt58 million in 1989 and Bt6 billion in 1994. Both floated on the stock market while it was soaring skyward on the boom. The Shinawatra and Bencharongkul families made fortunes that, an admirer commented, would usually have taken two to three generations. Because of AIS's built-in advantage, by far the bigger fortune fell to Thaksin. From a negative net-worth around 1990, the combined Shinawatra companies were valued at US$2.4 billion (Bt82.9 billion) five years later.

The mobile phone business was essentially an import business with after-sales service. There was no intrinsic reason it should create vast wealth. The causes lay in the boom and, especially, in the artificial duopoly, which let the two companies gouge consumers like a snake-oil salesman with the only bottle in town.

Act 2: The Defence. In the mid-1990s, all seemed set to change. Big profits created big envy. Six other companies wangled a concession and prepared to launch rival services. Consumer groups, economists, and technocrats campaigned for market liberalisation and proper regulation. A framework was written into the 1997 constitution. Foreign companies prepared to enter the market.

The duopoly was saved by the 1997 crisis. Two of the rival projects collapsed in the carnage. Two launched but went nowhere. Two were gobbled up by existing concessionaires. The Shinawatra companies were miraculously unscathed by the crisis, and AIS leapt further ahead of its rival.

Thaksin rose to power in the confusion. Somehow regulation and liberalisation never happened. For seven years, attempts to form the National Telecommunication Commission were sabotaged. TOT and CAT were slated for privatisation and ceased to have any weight as regulators. Their actual privatisation was constantly delayed so they failed to become competitors either. Attempts to unwind the concession structure were stonewalled.

But there was one small but important change. Foreign companies took the opportunity to enter the market while crisis-hit local firms were desperate for financial help. Singtel took a stake in AIS but remained a sleeping partner. Telenor first tried to buy into AIS, but then took the second-best option of DTAC. Orange linked up with CP TelecomAsia to launch a new service.

In April 2002, the two foreign-partnered firms went after AIS. They started a price-cutting war, and refused to pay the discriminatory interconnection charge. The response was majestic. From his position as premier, Thaksin personally lambasted the firms for breaking the rules. TOT stood firmly beside the man who had once been their client and was now their boss, telling the rivals: if you don't pay the charge, your customers won't be able to call a landline phone, and you will die. The two challengers waved the white flag of abject surrender. Months later, Orange lost its stomach for such an unequal contest and backed away from its Thai venture.

AIS met the price war by spending over Bt1 billion a year on marketing, and grabbed most of the market expansion that came from lower prices. Between 2001 and 2003, its profits multiplied five times.

Act 3: The Sell-out. In 2004, things changed again. Market growth slowed, margins narrowed, and people worried about saturation. The new 3G technology became available, but would require a huge investment (around Bt100 billion) and might not give payback for many years. A National Telecommunications Commission was finally formed, and began planning to liberalise, regulate, and ensure fair competition.

In the space of five months over 2005-2006, both the hugely profitable duopolies were sold.

On a world scale, the mobile-phone business had gone from infant to mature status within two decades. With margins falling, firms needed scale to afford the investments in technology. Singtel and Telenor both came from small countries, and knew they had to go global to survive. The Thai firms stalled at that hurdle.

Over its 15 years under Shin management, AIS generated Bt97 billion of net profit (Bt74 billion under Thaksin's premiership). Economists have tried to calculate how much of its value was due to political influence. A Thailand Development Research Institute study estimated about a third. Maybe the figure is nearer 40 per cent. That is how much the market value of Shin Corp has dropped since the day of the sale. The loss is around $1.7 billion (Bt55.4 billion).

That suggests however much Thaksin might have invested in politics - in buying bureaucrats, communications ministers, members of parliament, political parties, voters, or judges - it looks like it was worth it. As long as the family can hold onto it.

That's the sequel.

Chang Noi