3G licence bidding to start at Bt3bn

The National Telecommunications Commission (NTC) has discussed the price range and will finalise both the starting and reserve prices on Wednesday before announcing only the starting price on Thursday.

It will hold the next public hearing on the auction guidelines on November 5, when the starting price will also be put forward.

The source said NTC auction adviser Nera valued the 3G spectrum to be offered in the auction at Bt10 billion to Bt13 billion. After discounting for negative factors such as the declining economy, the consultant estimated the reserve price at Bt5 billion to Bt10 billion. The reserve price is the minimum amount the NTC expects for each of the four licences available.

Many NTC members argued that the starting price should be lower than the reserve price before agreeing to Bt3 billion-Bt5 billion.

Many commissioners wanted to see lower prices but feared that if the auction fails to produce an appropriate bid or the amount does not reflect the real spectrum value, the NTC would come under public criticism.

The commissioners do not want to set the prices too high and impose a heavy financial burden on the bid winners, especially during this time of a sagging economy.

"The commissioners have realised that besides paying for the licences, the bid winners still have to seek huge funds to finance the 3G network roll-out nationwide," the source said.

Each winner is expected to invest Bt10 billion to Bt20 billion per year on installing the 3G network during the first phase.

The NTC plans to hold the auction for the four licences using the 2.1GHz spectrum in December, with one licence offering 15MHz of bandwidth and the other three 10MHz each.

The NTC decision to use a straight auction to award the 3G licences has drawn strong criticism from the public and private sectors of favouring big, deep-pocketed bidders at the expense of smaller ones. They warn that the bid winners will pass the licence cost onto their subscribers to quickly recoup their investment.