Thailand’s re-auction of the 900MHz licence forfeited by Jas Mobile is now set to be a one-horse race, with market leader AIS to be the lone participant, after True Move decided not to join the sale next week.
The country’s second largest operator dtac also confirmed a month ago it would not participate in the re-auction, which is no surprise as the operator has long said the reserve price should be set at the original reserve price and not at Jas Mobile’s winning bid.
Jas Mobile missed its first instalment on 21 March for the 4G spectrum it won in December, bidding a record THB76 billion ($2.1 billion) for 10MHz of 900MHz spectrum. Number three operator True Move paid a similar price for the other 10MHz block.
The announcement by True’s board comes after more than a month of speculation about its interest in acquiring additional spectrum. In a filing to the Stock Exchange of Thailand on Monday, True’s CFO said it would not participate, noting it “already has a very comprehensive spectrum portfolio with sufficiently large bandwidth totaling 55MHz”.
The operator won two blocks of 4G spectrum in the 900MHz and 1.8GHz bands last year, paying a staggering THB116 billion ($3.22 billion). Despite the high price – and impact on its balance sheet for the next five to seven years – True said a month ago it would make a decision on participating in the 900MHz auction before the deadline in May.
Spectrum cap ignored
The telecoms regulator’s auction rules had barred True from participating because a successful bid would see it exceed the spectrum cap set out in the draft, but the military government ruled, using article 44 that gives it absolute power, that all operators could join except for Jas Mobile.
At the same time, the government rejected an offer by AIS to match Jas Mobile’s failed bid and called for the regulator to push ahead with the May re-auction. AIS, the second highest bidder for the 4G block, offered to pay THB75.65 billion ($2.1 billion) for the forfeited spectrum, but the government turned it down to avoid allegations of favouritism. National Broadcasting and Telecommunications Commission (NBTC) chairman Takorn Tantasith said a re-auction offered the best option for all sides and would avoid possible legal challenges, which would cause further delays. True had urged the NBTC to push ahead with the planned re-auction in order not to lose credibility.
With the sector’s reported history of under-the-table deals, it’s understandable the government wanted to avoid any claims of impropriety and err on the side of caution – despite dtac’s earlier statements about the unrealistic reserve price and lack of interest as well the spectrum cap keeping True from joining.
True’s board, obviously attracted by the possibility of picking up additional sub-1GHz spectrum, clearly opted for reason and acknowledged they can’t afford it. The operator already faces a net debt to EBITDA ratio of 4.3x or three times higher than a year ago.
True, even though it walks away from the 27 May re-auction, is the big winner; Jas Mobile on the other hand not only forfeits its guarantee of THB644 million, the regulator has said the mobile hopeful will have to fund the cost of the re-auction and threatened to cancel its parent company’s fixed-line licence. Jas certainly wishes the government accepted AIS’ offer.
While AIS won’t face any competition next week in the replacement auction and the government’s coffers won’t likely see the bid surpass the reserve price, the junta has demonstrated clearly the extent that the regulator’s authority has been undermined. It’s worth noting that a month ago the country’s cabinet approved a frequency act that puts the supposedly independent regulator under the control of the new digital economy commission.
The operators’ long-standing call for a roadmap on future spectrum allocations likely will be a long time in coming.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.