(Corrects to make noun possessive in headline)
* Market leader AIS makes highest bid of 14.63 bln baht
* TAC, True offer at starting price
* Shares drop after recent sharp gains
By Khettiya Jittapong
BANGKOK, Oct 16 (Reuters) - Thailand's three biggest telecoms operators bid a total of 41.63 billion baht ($1.4 billion) on Tuesday for the radio frequencies required for the long overdue introduction of faster third-generation (3G) mobile services.
The new 3G spectrum will enable companies to generate more revenue from fast-growing demand for data services and reduce regulatory costs under a new licensing regime.
Although there are more phones than potential customers in Thailand the country has struggled with the deregulation of its telecoms industry for decades, with progress in recent years proving especially slow due to multiple changes in government and resistance by state companies.
"Today is a historic day," said Takorn Tantasit, secretary-general of the National Broadcasting and Telecommunications Commission. The winners of the new spectrum will be announced later this week.
The regulator plans to hold an auction for even faster 4G network licences in 2013 but no new entrants are expected to bid for the licences.
After six hours of auctioning for nine frequency slots with a starting price set at 4.5 billion baht per slot, a total of 41.63 billion baht was bid for the spectrum, 2.8 percent higher than the combined starting price of 40.5 billion baht, according to data from the regulator.
The total bid was slightly lower than what analysts had expected.
Market leader Advanced Info Service (AIS), which is 2 1 percent owned by Singapore Telecommunications Ltd , of fered a combined 14.63 billion baht ($477 million) for three slots with the highest price put at 4.95 billion baht, the regulator said. It had been expected to spend about 16 billion baht ($522 million) on three new licences of 15MHz bandwidth.
Second-ranked Total Access Communication Pcl (TAC) , which is c ontrolled by Norway's Telenor, a n d sm aller rival True Corp of fered an identical 13.5 billion baht for three slots.
TAC was expected by analysts to spend 15.5 billion baht on the new spectrum a nd True Corp 14.8 billion baht.
The companies were still bound not to comment publicly on the auction.
Shares in the firms fell slightly on Tuesday after outperforming the market this year on expectations that the new licences would cut regulatory fees to 6 percent of revenue from about 25-30 percent under existing contracts.
Analysts said 3G services may not bring exciting growth in the first two years because operators have to focus on investing in infrastructure to introduce the services. But in the longer term those costs will be offset by lower regulatory fees.
"In the near term, however, earnings will be impacted negatively given a mismatch between network investment and subscriber migration to 3G," Arthur Pineda, an analyst at Citigroup, said in a note.
Winning bidders are required to get 3G coverage to 50 percent of the population in the first two years and 80 percent within four years, according to the regulator's guidelines.
AIS is expected to invest 50 billion baht in the next three years on its 3G network, Kiatnakin Securities said in a note.
TAC is expected to spend around 24.5 billion and True 20.2 billion, it added.
Subscribers are expected to flock to 3G, given the popularity of smartphones in Thailand, where many people rely on them to access online social networks.
AIS, which has the largest share of high data users among post-paid customers, should benefit most from growth in data services after the arrival of 3G, analysts said. ($1=30.6750 Thai baht) (Additional reporting by Manunphattr Dhanananphorn; Editing by Muralikumar Anantharaman and Greg Mahlich)