Thailand’s much anticipated and long-delayed 4G spectrum sale is back on the table. But with just one bidder interested in a single 900MHz block, the government’s hopes of a replay of the $6.5 billion windfall from auctions in 2015 auctions will certainly be dashed.
Telenor-owned dtac late last week reversed a decision not to participate in the 900MHz auction after a meeting with telecoms regulator the National Broadcast and Telecommunications Commission (NBTC).
The NBTC was forced to cancel a sale scheduled for 4 August after dtac and market leader AIS failed to file applications by a 15 June deadline. True Move announced in early June it wouldn’t participate, noting its existing 55MHz spectrum holding is sufficient to support its current subscriber base and future growth.
Part of the spectrum going up for sale is used by dtac on a concessionary basis from state-owned CAT Telecom. The concession expires on 15 September.
No 1.8GHz decision
After receiving dtac’s commitment on the 900MHz band, NBTC trimmed the reserve price for the 10MHz block by THB2 billion ($60.2 million) to THB36 billion, but will require the winner to spend the savings on a system to reduce interference with the adjacent bands, so in effect there is no price reduction.
NBTC also again amended the lot size in the 1.8GHz band (something it debated since the beginning of the year), from three blocks of 30MHz to nine of 10MHz. Both auctions are now scheduled for 18 and 19 August.
In a statement, dtac CEO Lars Norling said the company’s position on the 1.8GHz auction remained the same as it “already has sufficient high-band spectrum to provide the best data network services. However, we will go through the revised 1.8GHz auction rules and announce our official position later”.
Despite dtac repeatedly complaining about the high reserve price (THB37.5 billion for a 30MHz slot or THB12.5 billion for 10MHz), NBTC secretary general Takorn Tantasith said the operator will “inevitably” have to bid in the 1.8GHz and 900MHz auctions to continue serving its remaining 2G subscribers, Bangkok Post reported.
While the auction delays raise questions about dtac’s ability to provide sufficient network capacity after the concession expires (its holdings will drop to just 15MHz of 2.1GHz spectrum), the number of connections on its 2G network fell to less than 200,000 at end-June and it secured approvals in April to launch 4G services on TOT’s 2.3GHz spectrum. At the time, dtac stated it “expects no interruption of service provided to customers regardless of the auction timeline” and the TOT deal “will help strengthen our network capacity.”
Dtac is now better positioned to sit out the high-band auction and wait for a lower price in the next round. Without other bidders stepping forward, the regulator will again need to postpone the 1.8GHz sale and the government will have to settle on raising about $1.1 million from the single 900MHz block, instead of $4.5 billion if all ten lots were sold.
The question is will NBTC’s acting board be able to exert the necessary influence on the government to give it the authority to set a more realistic reserve price. The winning prices of the two 1.8GHz licences sold in 2015 were more than double the reserve price and the highest in the world after adjusting for GDP per capita based on purchasing power parity. The military government, no doubt, has already earmarked the funds to specific projects: any price relief would jeopardise that funding.
Revenue vs connectivity
Perhaps the regulator can point to a recent call by Ericsson CEO Borje Ekholm for governments around the world to think of spectrum not as a vital source of revenue, but as part of a critical infrastructure needed to increase national wealth. Rather than put a high price on spectrum, governments should encourage operators to build high-quality networks to connect all citizens, Ekholm said in a keynote at Mobile World Congress Shanghai.
Delays in the sale of 4G spectrum could also impact the time frame for enabling operators to secure the right frequency bands for 5G. The ball is back in hands of the government to reconsider how it manages the country’s limited spectrum resources and delivers on its Thailand 4.0 vision.
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.