It is time for CAT Telecom Plc and TOT Plc to merge in order to survive the tide of market liberalisation, a senior CAT senior executive acknowledges.

CAT's acting president, Phisal Jorphochaudom, said the company seemed to be less affected by rising oil prices than by fiercer competition prompted by the market being opened up by the national telecom-regulator.

The state agency is facing competition for overseas calls from Internet service-providers (ISPs) operating under licences from the National Telecommunications Commission (NTC).

ISPs can provide local and overseas calls from computer to computer and from computer to telephones on Voice Over Internet Protocol (VoIP) technology.

Last week the NTC also approved a plan to grant licences to Sky Office and Advanced International Network to provide the international Internet gateway and overseas calls. Although this is in competition with CAT, the NTC's approval is on condition that Sky Office and Advanced International lease networks from CAT in the initial phase.

Phisal said employees of the two stage agencies now realised it was time to combine after earlier protesting against a merger. TOT has 20,000 employees, and CAT has 5,700.

Phisal said he and TOT acting president Chamras Tantreesukhon agreed the best option would be for them to work as subsidiaries of the same holding company.

The holding option also means the agencies do not have to waste time in arranging for TOT to buy CAT's share in their joint-venture cellular operator Thai Mobile, Phisal added.

TOT is waiting for the Finance Ministry to assess CAT's share value in Thai Mobile. "TOT will not have to wait for the assessment any more if both CAT and TOT are under the same holding because Thai Mobile will belong to the holding," he said.

TOT wants to take full control of Thai Mobile, which is intended to be its flagship. Thai Mobile's key asset is its 1900MHz spectrum, which can be used to provide 3G broadband wireless technology.

CAT has cellular operator Hutchison-CAT, its joint venture with Hong Kong's Hutchison Telecommunications.

But CAT and TOT cannot move forward with the merger as quickly as they would like until CAT appoints a new board.

After CAT has a board, executives of both agencies will propose the merger options to their boards, who will meet to finalise the plan, which will then be submitted for the government's consideration.

If the boards choose the holding option and it is approved by the government, the Finance Ministry will create the holding to oversee both CAT and TOT. The ministry owns 100 per cent of the agencies.

The two boards, which would work under the holding, will then devise a plan to merge their overlapped businesses.

Usanee Mongkolporn

The Nation