Thailand’s largest operator AIS has cut earnings guidance for 2016 due to higher capex to build out its 4G network, coupled with plans to subsidise handsets for users who will need to migrate off its 2G network after it failed to obtain 900MHz spectrum.

The operator, which won 1.8GHz spectrum for $1.1 billion in November but came up short in last month’s 900MHz auction, expects its operating EBITDA to decline 17 per cent to around THB60 billion ($1.68 billion) this year.

AIS, which has a 46 per cent market share, will offer handset subsidies to its 2G customers to encourage them to move to its 3G network before 2G service is shutdown next month, said Fitch Ratings. The operator plans to continue to provide services for its remaining 2G customers during the transition period via a recently signed roaming deal with rival dtac. AIS estimates the total cost for handset subsidies and roaming service to be about THB8 billion this year.

The agency said the expected drop in earnings is unlikely to have an immediate impact on the company’s ratings.

Fitch believes AIS will have enough spectrum to provide 3G and 4G services for its large subscriber base despite the lack of low-frequency 900MHz spectrum and the 2G network shutdown.

Last month AIS said it is investing THB34 billion ($936 million) to roll out its LTE-Advanced network nationwide (72 provinces) by March. The operator said it has already spent THB14 billion over the last two months to install 7,000 4G base stations and will double that number over the next two months.