UPDATE 1-Thai Samart Corp scraps 3G bid plan, shares fall

* Opts to be MVNO operator due to lower costs

* Shares down 6.3 pct at one point to lowest in nearly a week (Adds details, quote)

BANGKOK Aug 30 (Reuters) - Telecoms group Samart Corp Pcl SAMA.BK said on Monday it would not take part in an upcoming auction for third-generation mobile phone licences in Thailand, sending its stock down as much as 6.3 percent.

Instead, the company said it preferred to offer a full service as a mobile virtual network operator (MVNO), which required a lower investment budget than building a 3G network.

"We chose the full MVNO plan over the 3G auction by considering the value of investment, risk and future opportunity," Chief Executive Watchai Vilailuck said in a statement.

An MVNO firm provides mobile phone services but does not have its own network, so it must have a lease agreement with other operators.

The stock closed down 5.17 percent at 8.25 baht, having hit a near-one-week low of 8.15 baht earlier, while the main Thai index .SETI rose 1.03 percent.

It hit its highest in nearly four years last week as investors expected the company would join the 3G bidding.

Samart had said it was in talks with Malaysia's Axiata Group Bhd (AXIA.KL) on plans to take part in the 3G bidding. However, Axiata later denied it would bid for a licence. [ID:nWNAS9231]

Telecomunication companies have to submit their applications by Monday.

The telecoms regulator plans to hold the 3G auction on Sept. 20-28. It is seen as a crucial step in reforming the $4.7 billion sector and could pave the way for foreign players to grab a bigger slice of the industry.

Under NTC's licensing plan, 3G-network operators will be obliged to reserve up to 40 percent of their capacity to lease to MVNO operators.

Samart will ask the National Telecommunications Commission (NTC) for the full MVNO licence, Watchai said.

The full MVNO can invest and partially own a core network, while normal MVNOs will have no network at all. Both can get mobile phone numbers from the NTC to provide the service. ($1=31.34 Baht) (Reporting by Arada Kultawanich and Khettiya Jittapong; Editing by Alan Raybould)