4G hopefuls already look ahead to Thailand’s next auction

4G hopefuls already look ahead to Thailand’s next auction

06 MAY 2015

NEW BLOG: Thailand’s long-delayed 4G spectrum auctions finally look like they are set to move ahead at the end of the year despite calls from various agencies to push the sale back to give the National Broadcasting and Telecommunications Commission (NBTC) more time to free up much needed additional spectrum.

The so-called NBTC superboard (a special committee set up to evaluate the performance of the regulator) asked for a delay in April, since just two 12.5MHz slots of 1.8GHz spectrum are scheduled to be auctioned off in November. Operators have said they each need at least 20MHz to offer 4G service effectively.

The ICT minister also recommended last month that the country’s state-owned operators and broadcasters return their used spectrum so it can be refarmed and auctioned as 4G spectrum. True Move CEO Suphachai Chearavanont urged the regulator to include unused 2.3 and 2.6GHz spectrum, noting the high-frequency bands will allow operators to offer highly efficient and low-cost 4G services.

Dominic Arena, managing director of AEC Advisory, told Mobile World Live that the auctions will likely move forward with just the 25MHz of 1.8GHz and 20MHz of 900MHz available. “It looks like the government will go ahead with what is clean and clear, but won’t stop it from having another auction next year.”

He argues that the auctions have to move ahead since market leader AIS can’t launch 4G until it owns suitable spectrum. True Move has 60 per cent of the available 4G market, while dtac has 40 per cent.

Arena down played any political agenda against AIS, noting that the operator has demonstrated it is no longer connected with former prime minister Thaksin Shinawatra. The government reportedly has been trying to tone down the politics.

AIS is likely prepared to pay whatever it takes for the 900MHz and 1.8GHz swathes as it has the most cash. “They are the ones with the best business case and biggest budget,” Arena said.

True has spectrum in the 850MHz band, with 95 per cent population coverage, used for 3G today but this could be upgraded to 4G. For AIS to compete with that using 2.1GHz it would have to throw so much cash at it that it dents the business case.

Prized 700MHz band
The 700MHz band is what everyone really wants, but that’s not yet on the horizon, since it’s used by new digital TV (DVB-T2) broadcasters.

“The new digital TV licences need to be moved to the correct part of the 700MHz band for the digital dividend to be made available. Right now it hasn’t happened, but this may change when the new law comes into effect to merge and reduce the internal telecoms and broadcasting boards of the NBTC,” Arena said.

The state broadcaster MCOT has agreed to return its 2.6GHz in return for a payment of around THB100 million (about $3.5 million), and True is reportedly pushing for this refarming to buy the spectrum and use it for TD-LTE to leverage its China Mobile strategic investor.

Dtac also has offered to unconditionally return 25MHz of unused 1.8GHz spectrum to the regulator. That spectrum is part of a concession with state-owned CAT Telecom and doesn’t expire until 2018. If dtac uses the spectrum, it has to give CAT 30 per cent of the revenue, so it definitely has an incentive to give it up and try to bid for it in an auction.

This is the spectrum the ICT Ministry wants to include in the next auction but, despite its calls, understands CAT is unlikely to cancel the concession unless it gains something in return.

Both state-owned operators – CAT and TOT – have been lobbying the government for free spectrum to give them a viable turnaround business case moving forward. This is vital for them to be able to contribute something to any partnership, since foreign partners won’t be interested in entering the market unless they have spectrum. CAT is reportedly considering partnering with a Korean or Japanese operator under a wholesale/MVNO arrangement.

TOT wants half of the 900MHz being offered and CAT wants the upper band of the 25MHz of 1.8GHz unused by dtac, which is valued at at least $400 million.

Arena, who is an adviser to CAT, expects the two will get some spectrum, with TOT allocated some 900MHz. But he said it won’t get it all.

CAT also will likely get some. “If CAT can’t get the 1.8GHz, it should go for half the 2.3GHz held by TOT. It needs either 25MHz of 1.8GHz or 30MHz of 2.3GHz to attract a partner for a 4G partnership like it did with True for 3G 850MHz,” he explained.

Newcomer Jasmine International, which owns the country’s second largest fixed broadband operator, said in March it plans to participate in the 4G auctions and is looking for a foreign partner to help fund the operation.

Arena said that its interest in 4G spectrum could be saber-rattling because AIS is moving into its fixed broadband territory. On the other hand, it may want to actually enter the mobile business but will face the same problem as TOT and CAT in trying to attract foreign partners.

“It’s main problem is a business case since spectrum is so expensive and the market is mature,” Arena said.

TOT may also partner with AIS on its 2.1GHz spectrum, which has been a white elephant for the loss-making enterprise. “TOT spent half a billion dollars, rolled out around 5,000 towers and had few customers, then tried to move to wholesale, but only attracted one significant MNVO. It’s had the 2.1GHz spectrum in use for around seven years and reportedly doesn’t earn enough revenue to repay the phase 1 network,” Arena said.

With at least six interested parties, it will be interesting to see who emerges as the real winner with just four slots being auctioned off at a reserve price of at least $344 million per block.

The amount the NBTC is forecast to earn from the auctions has increased by more than 50 per cent (over $2 billion) since a year ago when the military junta took control and pushed the sale back a year.

The regulator can certainly expect to earn a similar sum next year or in 2017 when all players can finally agree on freeing up the additional spectrum that is vital for the country’s operators to deliver quality 4G services.

Meanwhile, 4G connections in Asia Pacific hit 230 million last year (47 per cent of the global total). Thailand has a lot of catching up to do with its neighbours.

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.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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