Telephone Organization of Thailand (TOT) is a Public Utility State Enterprise in monopolistic form. Despite its monopolistic form, it cannot operate freely by itself, but subject to be under government control to ensure that the operation of the state enterprise be consistent with the National Economic and Social Development Plan. Today telephone operation in Thailand has been widely expanded. This expansion is necessary in order to keep up with the country’s political, economical and social progress, as well as for the objective of national security. Telephone expansion to meet public demand requires a large amount of fund for investment. The average cost per line would be approximately Baht 35,000 with the tendency to rise higher and higher in the future. In general, Telecommunications system is expanding very rapidly resulting in the continuing development of modern switching equipment. During the past decades, switching equipment utilized by Telephone Organization of Thailand were calls connected by operators in step by step system, Cross-Bar system. Until recently, the application of Stored Program Control (SPC) have been introduced to ensure substantial lines and provide rapidity and convenience in making calls. The most important point is to expand network to be in line with the demand. Thus, the most essential part of network expansion will be the implementation of modern switching equipment which TOT have to decide the selection of most suitable switching equipment system for telephone expansion. The investment should be most economical, and giving substantial return in economic development system of TOT. At present, TOT is implementing two long term investment projects, they are: TOT Economics Development Project B.E. 2520-2527 (EDP 1977-1984) and TOT Economics and Social Development B.E.2527-2531 (EDP 1984-1988) with investment budgets of Baht 18,430.581 million and Baht 37,460 million respectively. Sources of fund for the first project are consisting of: foreign currency loans for apporx. Baht 11,119.225 million, telephone bond for approx. Baht 3,900 million, customer’s deposit for approx. Baht 1,002 million and fund from TOT retained earnings for approx. Baht 2,409.356 million. Funds for the latter project are to be financed from: foreign currency loans for approx. Baht 19,080 million, domestic loans for approx. Baht 6,615 million, telephone bond for approx. Baht 6,500 million, customer’s deposit for approx. Baht 3,630 million, and fund from TOT retained earnings for approx. 1,635 million. It is obvious that the major portions of investment budgets for the said projects are secured through loans, expecting to be approx. 81-86 percent of overall investment funds. By the implementation of EDP 1977-1984 which has an objective to expand number of telephone by 528,800 lines with expected project completion in 1884. The results for 1981 to 1983, TOT was able to install additional telephone number by only 97,337 lines compared to the planned target of 300,000 lines and was 202,663 lines under the target. The main reason was that, during 1981 TOT had initiated the study the use of SPC exchange system instead of the Cross-Bar exchange system. The study period was rather long since TOT lacked technological knowledge and experience on such equipment. Thus the implementation of the project could not meet the established target. Therefore, TOT have to extend the implementation period of EDP 1977-1984 by two years until 1986. The delay on installation created strong impact on TOT revenue, causing a short on expected revenue of approx. Baht 7,650.165 million. The disbursements of foreign currency fund were not in line with the plan, resulting in higher amount of commitment changes and other operating expenses, e.g. overtime, maintenance, utilities, etc. TOT is presently at the initial stage of ESDP 1984-1988 with the objective to expand number of telephone by 933,300 lines. TOT is attempting every way possible to manage the project to meet the established target. With respect to financial analyses of TOT covering the period of 1978-1988, it is anticipated that, at the end of 1988 TOT will be able to provide telephone service throughout the kingdom for 1.5 million lines with a total assets of approx. Baht 84,024 million and total liabilities of approx. Baht 74,452 million. The operation and financial position of TOT in the previous years are deemed to be in satisfactory level because borrowings for works expansion were not so high which constituted not too risky situation and in the mean time provide TOT with good ability to pay interest and to repay principal. On The contrary, for TOT future projection, it is anticipated that TOT is facing with increasing risk due to heavy burden from loans for investment which are at a high percentage of 80-85 of total investment. TOT have to be liable for large amount of repayment of principal and payment of interest, which is projected to be as high as approx. Baht 20,505 million or about 43 percent of revenue from operation during the years 1984-1988. In studying on the investment per line installation of SPC switching equipment against installation of Cross-Bar. Obviously, investment per line of SPC is lower. Presently, TOT is applying SPC system in operation. Moreover, in making this study, various obstacles which affects the expansion project making the growth not cope up with public demands on telephones had been found, a few to mention are: government policy, internal management and finance, etc.
