The cost of delaying privatization: the case of the Telephone Organization of Thailand (TOT)

Other conference contribution, 2009

The Thai government has planned to privatize the TOT at least since 1997 when the Master Plan for Telecommunication Development was adopted. However, the implementation has been delayed considerably. The question of the cost of delaying privatization by employing the Telephone Organization of Thailand (TOT) as a case study is addressed in this paper. To address the cost of delay, a counterfactual forecasting model is constructed for the years 2007-2012. The starting year of the evaluation is 2006, since this year was the deadline for privatization under the WTO agreement. The forecasting model utilizes the traditional investment approach for three main services: fixed line, mobile and Internet broadband. The result reveals that the value of delaying the privatization process could be higher than following the WTO agreed time process for TOT privatization since the growth of revenue sharing and from concessionaires is higher than if it privatized and did business by itself. However, policy makers should be more concerned with delaying privatization since the indirect cost of delaying, for example, a few new telecommunications products was introduced, and the high price of services may distort the benefits of privatization. In such a scenario, consumers and industry will be losers in the long run.