The 3G business plan proposed by TOT Plc is likely to be endorsed by the State Enterprise Policy Office (SEPO) and submitted to the Finance Ministry for approval.

Areepong Bhoocha-oom, the SEPO director-general, said the agency was studying the revised plan for third-generation mobile services carefully and that it appeared satisfactory.

The state telecom enterprise hired ABN Amro to improve the plan after SEPO returned the original plan and asked for more details and a clearer direction.

The SEPO has recommended that the Finance Ministry should not guarantee the loans TOT sought to finance the project, and that the funds should be raised locally. TOT has said that a complete 3G network to offer high-speed data and multimedia services could cost at least 20 billion baht.

TOT president Varut Suvakorn said that the sooner the plan was approved, the better it would be for TOT.

The state enterprise has been looking for new revenue sources in order to wean itself off a heavy dependence on revenue-sharing concession payments from private operators.

TOT's original 3G business plan was prepared by C&C International Ventures. It called for 5,220 base stations and forecast an internal rate of return at 20.1%, with revenues increasing to 10 billion baht a year, and breaking even in 71/2 years.

But the cabinet rejected the plan as lacking in detail and ABN Amro was hired to revise it.

The Dutch bank said that TOT could barely compete in the retail market because it was behind other operators and had no experience. ABN Amro forecast a rate of return for TOT's 3G business at 13.1% and said it would break even in 9.4 years if TOT marketed the service properly.

It bases its assumptions on TOT acting as a mobile virtual network operator (MVNO), or a company that provides service but does not have its own licensed frequency or all of the infrastructure required to provide mobile telephone service.

If TOT implemented only a retail model, the IRR would be 3.1% and breaking even would take 11 years.

It said that if TOT decided on both MVNO and retail strategies, it would need to invest 16.7 billion baht next year, 4.98 billion in 2011, 540 million in 2012, and 1.18 billion in 2013. The business as a result would earn 1.5 billion baht in 2011, 3.7 billion in 2012, 7.7 billion in 2013 and 12 billion in 2014, it said.

It said the huge investment in the first two years would be in network infrastructure. However, TOT could negotiate with Advanced Info Service because the mobile market leader's existing infrastructure is a TOT asset under the build-transfer-operate concession agreement.