BANGKOK (Reuters) - Thailand’s top three telecoms companies bid 41.63 billion baht ($1.36 billion) on Tuesday to obtain spectrum for new 3G services as part of the country’s plans to expedite the introduction of long-delayed high-speed third-generation mobile services.
The new 3G spectrum will enable companies to tap more revenue from fast-growing data services and reduce regulatory costs under a new licensing regime.
Thailand has struggled with the deregulation of its telecoms industry for decades. Progress in recent years has been 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 will be announced later this week.
The regulator plans to hold an auction for 4G services in 2013 to tap robust demand for data services in a saturated market, where mobile phone penetration is more than 111 percent.
No new entrants are expected to bid for the licenses.
After six hours of auction process for nine slots with starting price of 4.5 billion baht per slot, a total of 41.63 billion baht was bid for the spectrum, 2.8 percent higher than 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) had been expected to spend about 16 billion baht ($522 million) on three new licenses of 15MHz bandwidth. Second-ranked Total Access Communication Pcl (TAC) was expected to spend 15.5 billion baht and True Corp 14.8 billion baht.
The companies are in a quiet period and cannot comment publicly on the auction.
Shares in the telecom firms fell slightly on Tuesday after outperforming the market this year on expectations that the new licenses would cut regulatory fees to 6 percent of revenue from about 25-30 percent under existing contracts.
LONG-TERM POSITIVE
Analysts said 3G services may not bring exciting growth in the first two years because operators have to focus on investments to roll out 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, 21 percent owned by Singapore Telecommunications Ltd, is expected to invest 50 billion baht in the next three years to roll out 3G networks, Kiatnakin Securities said in a note.
TAC, controlled by Norway’s Telenor, 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 use social networks.
AIS, which has the largest share of high data usage for post-paid users, should benefit most from growth in data services after the arrival of 3G, analysts said.
($1 = 30.6750 Thai baht)
Reporting by Khettiya Jittapong and Manunphattr Dhanananphorn; Editing by Alan Raybould and Muralikumar Anantharaman
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