Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

Three-Cornered Race
Mobile services market shares in Thailand
Source: Thailand's National Broadcasting and Telecommunications Commission

Mobile phone services in Asia have become a multiplayer game of rock, paper, scissors, in which everybody tries to play differently but ends up losing to somebody else.  

A recent example is Thailand, where after 198 rounds of bidding for 900 megahertz airwaves, an unexpected winner was broadband service provider Jasmine International, a new entrant in a saturated market.

Jasmine's shares fell 35 percent over Monday and Tuesday on concerns it had grossly overpaid. True Corp., currently the No. 3 player, won the second of the two licenses on offer. But it might be a Pyrrhic victory. Unless True Corp. can use the new capacity to boost its market share, the 76.3 billion baht ($2.1 billion) price tag for the airwaves may mean a smaller profit pool for shareholders, including Thai billionaire Dhanin Chearavanont's CP Group and China Mobile, which has an 18 percent stake. 

So much for winners' curse. The two main losers in the auction -- market leader, Advanced Info, and Total Access -- didn't fare much better either. Shares of Advanced Info, which is part owned by Singapore Telecommunications, dropped more than 21 percent in the same two-day period on expectations that to defend its position it may now be forced to upgrade its network and pay its second-generation handset users to start using third-generation devices.

Total Access, backed by Norway's Telenor, also slumped because the No.2 player still operates under a "concession" regime, in which it has to share 30 percent of its revenue with state-run CAT Telecom, rather than pay a 5.25 percent license fee. That makes its cost structure less competitive, according to Krungsri Securities.

They All Fall Down
Two-day price change in Thai mobile stocks
Source: Bloomberg
Note: Percentage change between Friday, Dec. 18 and Tuesday, Dec. 22, 2015

Mobile phones are the big hope of Asia, the foundation stone for large e-commerce and other digital businesses of the future. But it's a shaky stone, easily unsettled by just one surprise. In Thailand, it's Jasmine's entry that has upset the equilibrium. In India, it's the impending launch of a fourth-generation service by billionaire Mukesh Ambani's Reliance Jio that's thrown the industry into a tizz. Big players like Bharti Airtel are sinking billions of dollars into network upgrades while smaller rivals either quit or get swallowed into larger combines. Meanwhile, in the Philippines, the biggest carrier is so miffed by the potential entry of Australia's Telstra that it's threatening to ask President Benigno Aquino to intervene and force Telstra's would-be local partner San Miguel to share the 700 megahertz spectrum that was given to one of the conglomerate's group companies for broadcast services.

That spectrum can be key to higher Internet speeds on mobile devices, which is what the battle for data services in Asia is all about. But while the telecom skirmishes are unquestionably good for consumers, it's almost impossible for equity investors to figure out which Asian carrier will eventually win the war, or indeed if any of them ever will. After all, if a service provider overbids for spectrum, it can kiss goodbye to profitability. If it lets its competitor overbid instead, it should be prepared to lose market share. And if it tries to preserve its position, it'll end up burning cash on network upgrades and handset subsidies.

Creditors Calling
Net debt-to-Ebitda for Asia's telecom carriers
Source: Bloomberg
Note: Data for 32 largest telecom carriers in Asian emerging markets

That's rock, paper, scissors, and just like in the game, the key to long-term success may be to try all three strategies approximately one-third of the time. Sounds like child's play, but it really isn't -- not with net debt for mobile carriers in Asia's emerging economies going from 0.48 times their annual earnings before interest, tax, depreciation and amortization in 2010 to 1.05 times now. Desperation on the part of the more indebted operators could mean more unpredictable shifts in strategy, and some nasty shocks for investors.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andy Mukherjee in Singapore at

To contact the editor responsible for this story:
Katrina Nicholas at