UPDATE 1-Thai AIS launches 3G in Bangkok, limited coverage

(Adds company quotes, details)

By Khettiya Jittapong

BANGKOK, Dec 3 (Reuters) - Thailand's top mobile phone operator, Advanced Info Service ADVA.BK, said on Wednesday it had launched a third-generation mobile service on its existing network at two shopping centres in central Bangkok.

AIS, partly owned by Singapore Telecommunications Ltd (STEL.SI), is the first Thai operator to launch a 3G service using HSPA (high speed packet access) technology in Bangkok. It launched the same service in the northern province of Chiang Mai in May.

It plans to start a 3G service in the eastern province of Chonburi early next year, it said in a statement.

The Dec 1 launch makes AIS the only operator in Thailand to provide 3G service, which enables users to surf wireless high-speed Internet and download mutlimedia data at 30 times faster than current system.

Its main rival, second-ranked Total Access Communications DTAC.BK (TACC.SI), has said it planned to launch a similar service in the second quarter of 2009.

AIS, which recently reviewed its 3G investment as the global financial crisis hit consumer demand, decided to launch the service in limited areas, Somchai Lertsuttiwong, AIS's executive vice president for marketing, told Reuters.

AIS planned to invest 16 billion baht ($451 million) this year on network expansion, which included an installation of 3G equipment at more than 500 base stations to expand 3G service to three provinces early next year, he said.

"The investment of this phase is very small, which is part of the 16 billion baht," he said.

China's Huawei Technologies [HWT.UL] is major equipment supplier for AIS's 3G network.

Thai telecoms operators are competing to deploy new technologies, including 3G on existing networks, to extract new revenue from a nearly saturated sector.

They are also keen to bid for new 3G licences on a new 2.1 GHz spectrum from the National Telecommunication Commission (NTC).

The launch of 3G on existing networks is an option for mobile operators while they are waiting for NTC to issue the new 3G licences, a key step in reforming the sector.

Under the current contracts, telecoms companies pay a portion of their revenues to state-owned firms for the right to operate networks they build themselves. The new 3G licencing will help reduce costs for operators.

At the midday break, AIS shares were up 2 percent at 73.50 baht, while the main Thai index was up 2.24 percent. Total Access shares rose 1.7 percent at 30 baht. ($1=35.48 Baht) (Editing by Alan Raybould)