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New rules aim to limit foreign ownership

New regulations preventing foreign dominance of Thai telecommunications operators are now in effect, aiming to promote business management by local executives and prevent the use of nominees by foreigners to control the companies.

The National Telecommunicat-ions Commission (NTC) also devised the regulations to enable it to control foreign investment in the sector transparently and to be of use to the upcoming National Broadcasting and Telecommunications Commission in auctioning new spectrum licences.  NTC commissioner Sudharma Yoonaidharma said the regulations, which were published in the Royal Gazette on Tuesday, were good for local telecom operators.  Wichian Mektrakarn, chief executive officer of Advanced Info Service (AIS), said his company was ready to comply with the regulations, adding that it had only a few foreigners on its board of directors and all management was controlled by Thais.

AIS has Singapore Telecom as its strategic partner, while Norway’s Telenor is strategic partner of Total Access Communication (DTAC).  Sigve Brekke, head of Telenor for Asian operation, has said his company and DTAC are ready to comply with all laws and regulations.  The NTC conducted at least seven public hearings on the draft regulations. It believes they are necessary to protect Thai businesses and the economy during this period of market liberalisation under the country’s commitment to the Asean Economic Community.

It has also been concerned about the use of nominees to hold shares in local telecom companies on behalf of foreigners to the point where actual foreign shareholding exceeds the permissible level.  However, many foreign business organisations in Thailand opposed the regulations when they were still in the draft stage, arguing that they would have negative implications for existing and future foreign operators investing in Thailand.  The NTC defines foreign dominance as direct and indirect control over a company’s policies and appointment of directors and high-ranking management.

The prohibition of foreign dominance will apply to holders of Type 2 and 3 licences and the holders of state telecom concessions.  Type 2 licence holders are telecoms with or without their own network and whose competition will affect specific markets, while those with Type 3 licences have their own networks and whose competition will affect the public.  Licence and concession holders have to report to the NTC every year on their foreign-ownership status. If there is foreign dominance, the companies have to propose to the NTC how to solve the problem within a certain given period. If they fail to prevent foreign dominance, the NTC can suspend or revoke their licence.

Source: The Nation

ThaiVest Editorial Team

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