Thai Move to 4G Mobile May Lure Overseas Bidders: Southeast Asia
Thailand needs to make more bandwidth available to lure overseas bidders when it auctions licenses to run fourth-generation mobile-phone networks in 2014, the head of the country’s second-biggest operator said.
The regulator could include unused frequency bands that are scheduled to be returned to a state-owned utility in 2018 to make the contest more attractive, said Jon Eddy Abdullah, chief executive officer of Total Access Telecommunications (DTAC) Pcl, which is 43 percent owned by Telenor ASA (TEL) and controls the spectrum.
Faster 4G networks would help operators meet surging demand for mobile data in Thailand, where the use of social-media platforms such as Facebook already outstrips that of South Korea and Japan. Thai operators began providing 3G services in May after eight years of delays caused by legal battles and regulatory wrangling.
“If you want a more successful auction, if you want to potentially get more money, you have to make it attractive,” Eddy Abdullah said in an interview in Bangkok. “If you want potential foreign buyers, you have to make it more attractive.”
Thailand raised 41.6 billion baht ($1.3 billion) when it awarded 3G licenses to Total Access, bigger rival Advanced Info Service (ADVANC) Pcl and True Corp. (TRUE) Pcl in 2012. The country was one of the last in Southeast Asia to offer widespread 3G services. No international companies took part, and the roll out was delayed until the Thai bidders were cleared of allegations they colluded to keep prices low.
The National Broadcasting and Telecommunications Commission plans to auction 1,800-megahertz and 900-megahertz spectrum by September next year, Commissioner Suthiphon Thaveechaiyagarn said in an interview. It expects to grant licenses in late 2014 and companies will begin 4G services early the following year, he said. The regulator hasn’t decided how many licenses will be awarded.
“Next year will be the perfect timing for the 4G auction,” Suthiphon said. “It should give more time for operators to prepare themselves to join the bid and allow the technology, which is quite costly now, to become cheaper.”
The three biggest Thai mobile companies have already pledged to invest a combined 119 billion baht in their 3G networks.
The regulator plans to auction at least 42.5 megahertz of frequency and further 25 megahertz could be made available if Total Access and state-owned CAT Telecom Pcl agree to give up their right to the surplus bandwidth, Suthiphon said.
“Technically, there is no way that frequency will be used before the end of the concession in 2018,” Total Access’s Eddy Abdullah said. That spectrum sits between two other bands that will be included in the auction, and it makes more sense to combine them, he said.
“Put it all together and then you have 50 megahertz of 1,800 spectrum, which is highly attractive for domestic and international companies, and now you have auction,” he said.
Urging the regulator to include the unused spectrum to attract international bidders may save Total Access money.
“We are quite vocal, let’s try to auction it off for the treasury’s benefit, the tax-payer benefit,” Eddy Abdullah said. “We are stuck in concession until 2018. We don’t solve our concession issue. What if I have to pay three-to-four times more for spectrum by 2018? That’s why we recommend to auction it.”
Even without access to widespread 3G networks, the number of Thais using Facebook has risen to about 26 percent of the population, Kasikorn Securities Co. said in a June research note, exceeding penetration levels in South Korea and Japan.
“The improved network coverage and more affordable devices should further support data usage growth,” it said.
The three biggest Thai companies all said they plan to bid for 4G licenses, which will reduce costs by ending the need to share revenue with state-owned utilities.
True is already running 4G trials using it existing frequencies, and Advanced Info has started a limited 4G trial in central Bangkok.
“Thai people have a strong demand for data usage,” Advanced Info Chief Executive Officer Wichian Mektrakarn said in an interview on Aug. 1. “4G will meet demand from heavy data users or any public services that require a high quality and reliable network, like telemedicine.”
About 12.7 million of Advanced Info’s 37 million customers were using data services as of the end of March, it said. Singapore Telecommunications Ltd. (ST) has a 21 percent stake in Advanced Info, according to data compiled by Bloomberg. Shin Corp. (INTUCH), which is controlled by Singapore’s Temasek Holdings Pte and its affiliates, owns 40 percent.
True “is confident it will win the bidding” President Suphachai Chearavanont said at a media briefing on Aug. 1. True’s existing concession to use the 1,800 megahertz frequency expires next month, potentially affecting 17 million phone users. The regulator will issue a regulation this month to ensure the continuity of service for True’s customers until new spectrum is auctioned, said Suthiphon, the commissioner.
When True’s 2,100 megahertz 4G network started it May, it covered densely populated areas including Bangkok’s central business districts, and may be expanded to 15 provinces this year including Chon Buri, Prachuap Khiri Khan, Chiang Mai, Phuket, Surat Thani and Ayutthaya. True plans to increase the number of 4G base stations to 2,000 by year-end.
The 4G auction is a bigger challenge for the regulator because it involves frequencies governed by concessions and unused spectrum, Eddy Abdullah said.
“I know it’s difficult,” he said. “I know there is no legal precedent. I know it’s a challenge. But we just want everyone to sit down and consider. That would be really interesting. International players would love it and it will be good auction.”
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