Thai 3G Auction Raises $1.4 Billion as Low Price Brings Risks

Thailand raised 41.6 billion baht ($1.4 billion) selling licenses to provide high-speed mobile-phone services, about 30 percent below the value assessed by the country’s telecommunications regulator.

The National Broadcasting and Telecommunications Commission sold nine licenses to provide third-generation technology for an average of 4.63 billion baht to the country’s three biggest operators in an auction delayed since 2005. Six of them sold for the minimum price of 4.5 billion baht, according to Sutisak Tantayotin, the regulator’s director.

“There is no evidence of collusion,” Suthiphol Thaweechaikarn, a commissioner with the regulator, told reporters yesterday in Bangkok. “Our process is transparent and in line with the law. If someone will sue us for setting a low price, we can explain that.”

Delays in auctioning licenses to provide faster download speeds left Thailand as one of Southeast Asia’s only countries without widespread 3G technology. Mobile-phone stocks fell as further legal challenges may come from groups who say the sale should bring the government more revenue, according to Rattana Leenutaphong, an analyst at IV Global Securities Pcl.

“The license price is a bit low at almost the minimum,” Rattana said by phone. “This may increase the risk that the auction may be called off.”

Stocks Fall

Advanced Info Service Pcl, Thailand’s biggest mobile-phone operator, fell 3.5 percent, the most in seven weeks. Total Access Communications Pcl, controlled by Norway’s Telenor ASA, dropped 3.7 percent, the biggest decline since April 11. True Corp. Pcl fell 0.9 percent.

Advanced Info bid 14.63 billion baht in total, giving it first pick of the spectrum offered, said Sethapong Malisuwan, the regulator’s vice chairman. Total Access and True both offered cumulative bids of 13.5 billion, the minimum price.

“We have pressure on both sides -- those who said the price is too high and those who said the price is too low,” Sethapong said. “But we need to find the equilibrium price.”

Several lawsuits challenging the auction are now before the Administrative Court, which has blocked sales in the past. The regulator must take responsibility for failing to generate more income from the sale, Somkiat Tangkitvanich, president of the Thailand Development Research Institute, told Thai PBS television station.

‘Take Responsibility’

“The license prices at close to the minimum level demonstrated there was absolutely no competition in the auction process,” Somkiat said. “NBTC has to review this auction and make a decision to take responsibility for it.”

Thailand first planned to auction 3G licenses in 2005, a year before former Prime Minister Thaksin Shinawatra’s sale of Advanced Info and other companies to Singapore’s Temasek Holdings Pte sparked protests that culminated in the military coup that ousted him. Yingluck Shinawatra, Thaksin’s sister and a former president of Advanced Info, became prime minister last year after her party won a parliamentary majority.

In 2010, a Thai court blocked an auction for 3G licenses after state-run CAT Telecom Pcl sought an injunction claiming the regulator didn’t have the authority to conduct the sale. The delays have prompted Thai mobile-phone companies to start offering limited 3G services using upgraded 2G networks they operate under concessions from state companies CAT and TOT Pcl.

The three private operators are counting on mobile Internet to spur revenue from users of smartphones such as Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry. Average revenue per user this year in Thailand is $6.7, compared with a high of $56 in other Asian markets, according to Nattaporn Phan-Udom, a partner at PricewaterhouseCoopers in Thailand.

Advanced Info maintained its leading market position with 671,000 net additions in the three-month period ending June, bringing its total subscriber base to 34.8 million. That compares with 23.6 million for Total Access and 19.3 million for True Corp., according to the most recent stock exchange filings.

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