Bangkok Bank (BBL), the guarantor of Thai TV Co, says it will pay the guarantee to the National Broadcasting and Telecommunications Commission (NBTC) only after its customer consents to the move.
The statement by BBL signals a possibly lengthy case, as the digital TV operator has vowed to go to court.
Under the legal process, the bank must wait for an official letter from the regulator requesting the money after the digital TV operator failed to pay the second instalment of its auction fee, BBL executive vice-president Virasak Suthanthavibul said.
The bank will then inform the company of the request and ask whether it agrees to such a payment.
If Thai TV wants BBL, the country's second-largest lender by assets, to pay the guarantee, the bank will make the payment and swap the guarantee for a loan, as per the normal course of business, Mr Virasak said.
Suchat Chomkul, a lawyer for Thai TV, said the company would not allow the NBTC to claim its bank guarantee but would instead sue the NBTC in the Central Administrative Court for failing to facilitate the digital TV transition.
"We believe we have sufficient reasons to do this," he said.
The company will ask BBL to halt the legal payment process on its behalf until the court case ends.
Thai TV placed a guarantee letter worth 1.6 billion baht for its two digital TV channels — the Loca children's channel and Thai TV news channel.
The company missed paying a second instalment worth 288 million baht and wants to return its two licences to the broadcasting regulator after running losses since it started broadcasting in the first half of last year.
Thai TV alleges digital operators have been hurt by what it terms the NBTC's failure to promote network coverage and stability and distribute set-top boxes.
The default marked the first time a digital TV licence holder failed to pay its auction fee. There are now 24 licensed digital TV channels.
"The bank has no problem with paying money [to the NBTC], but we must thoroughly scrutinise the contract [between BBL and Thai TV] before making a decision," Mr Virasak said.
BBL is the largest guarantor for digital TV operators, with the service worth a combined 21.6 billion baht for 14 channels.
Next are Kasikornbank (KBank), which has issued 10.9 billion baht in guarantees to eight channels, and Bank of Ayudhya with 2.68 billion in guarantees to two channels.
Only a few digital TV operators have taken out loans to fund their operations.
KBank said it had lent 5 billion baht to digital TV operators.
All of BBL's digital TV borrowers are servicing their debt normally, Mr Virasak said without providing figures.
BBL president Chartsiri Sophonpanich said his bank had carefully analysed the digital TV business before providing financial support to the business operators.
The tough times for them during the first three years is not beyond the bank's forecast, he said.