Singtel's Thai dispute sent for arbitration

Singapore

THE Thai associate of Singapore Telecommunications (Singtel), Advanced Info Service Public Company Ltd (AIS), is taking to arbitration a 70 billion baht (S$2.74 billion) claim against it by Thai state-owned telco TOT Public Company Ltd.

TOT's claim relates to alleged unlawful contract amendments dating back to 2001 and 2002. TOT is among a number of state-owned enterprises that the Thai government has targeted for restructuring to become more competitive. Its long-standing revenue-sharing contract with AIS, Thailand's biggest mobile operator, expired on Wednesday.

Thailand's military government had asked TOT to seek the compensation from AIS before the concession contract expired, or it might be charged with neglect of duty, according to a Reuters report on Sept 28.

Singtel, a regional telco giant which owns 23.3 per cent of AIS, disclosed in an announcement on Thursday morning that AIS refutes the claim and has submitted the matter for arbitration.

AIS CEO Somchai Lertsutiwong said in a letter to the Stock Exchange of Thailand translated to English from Thai:

"The company strongly confirms that the amendments to the agreement were made correctly, faithfully, and with the consent of both parties."

"The amendment has been valid and binding to the contractual parties and there was neither rejection nor revocation of the amendment raised by TOT until the expiry of the agreement on Sept 30, 2015," he said. "The company then has no responsibility to pay such a claim to TOT."

The TOT-AIS dispute dates back many years. AIS and its parent, Shin Corp, were founded by former Thai prime minister Thaksin Shinawatra.

In 1990, TOT granted AIS the right to operate a mobile phone network for 25 years.

The dispute at hand involves a 2001 amendment that reduced the portion of revenues in prepaid services AIS had to share with TOT.

Another contested amendment in 2002 allowed AIS to deduct roaming fees from the concession fees payable to TOT.

Complicating matters was Thaksin's sale of Shin Corp to Singapore's Temasek Holdings in 2006, which led to much controversy in Thailand.

TOT had demanded various payments from AIS through the years, Singtel said in disclosures made in its latest annual report under the section informing investors of the significant contingent liabilities of its joint ventures.

Various cases are pending arbitration, Singtel said.

Singtel shares closed unchanged at S$3.60 on Thursday.