Gruelling 4G licence auction nets Bt80 billion after 33 hours

Corporate November 13, 2015 01:00


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AFTER MORE than 33 hours of marathon bidding spread over two days, Advanced Wireless Network (AWN) of Advanced Info Service (AIS) and True Move H Universal Communication of True Corp emerged as winners of 4G-1800MHz licences, with their combined bid amoun

The final price was double the full total spectrum price.
The telecom watchdog was quick to reassure people that despite the astronomically high final price, 4G service fee would be lower than that for existing 3G services. The bidding ended in the 86th round at 7.05pm yesterday when True secured the first licence block with the final bid price of Bt39.792 billion, while AWN secured the second block by offering Bt40.986 billion.
The National Broadcasting and Telecommunications Commission (NBTC) announced the bid results yesterday. The starting price for each of the licences was Bt15.912 billion, or 80 per cent of the full Bt19.890 billion price. The bidding began at 10am on Wednesday. The final total bid price of two 4G-1800MHz licences skyrocketed more than 100 per cent of the total full spectrum price.
Two other bidders – Jas Mobile Broadband of Jasmine International and DTAC TriNet of Total Access Communication – were also in the race. The auction appeared to be a competition between AWN, True, and Jas shortly after bidding started on Wednesday. Jas’ final offer was Bt38.996 billion while that of DTAC was Bt17.504 billion
The NBTC telecom committee will convene within seven days to endorse the bid outcome. The winners have to pay 50 per cent of the fee upfront within 90 days as first instalment.
NBTC secretary-general Takorn Tantasith said the latest total bid price, when translated into the value per MHz per person based on the national population of 67 million, would be around Bt20 per MHz per person. This makes it one of the highest bids in the history of 1800MHz licence auctions. According to a spectrum valuation benchmark of International Telecom Union on 1800MHz auction, the average value is Bt11 per MHz per person.
Takorn reassured that the 1800MHz licences obliged the bid winners to offer 4G data and voice services at a price lower than those of existing 3G services. The 4G data service fee must be lower than the 26 satang per megabyte of 3G service, while 4G voice service fee must be lower than between 69 satang per minute and 72 satang of 3G service, Takorn said.
Share prices of the three bidders plummeted yesterday, as market reacted to their licence bids being far above expectation, said Mayuree Chowvikran, an analyst at Maybank Kim Eng Securities (Thailand). The market had expected the final bid price to be Bt45 billion.
Thailand Development and Research Institute (TDRI) president Somkiat Tangkitvanich said yesterday that the NBTC and the government have to make sure that there would be no abortion of the ongoing 1800MHz and the planned 900MHz auctions. If the auctions are aborted, the credibility of the government would be affected.
The Thai economy and the information technology sector will benefit from the awarding of new 4G telecom licences as early as next year as the bid winners will quickly implement their investment plans, according to Supant Mongkolsuthree, chairman of Federation of Thai Industries.
Supant, who is also president of TKS Technologies, said the relatively high bidding prices could, however, affect consumers in terms of service pricing. According to a JP Morgan research, the bidding prices have far exceeded analysts’ expectation since each licence was earlier thought to cost just around Bt15 billion to Bt20 billion.
Such a huge premium for the 1800MHz spectrum would also set a high expectation on the pricing of 900MHz spectrum auctions, which will take place next month.
The high bid prices will also have negative implications on revenues and cashflow as reflected by yesterday’s decline in the prices of Thai telecom stocks. Supant said the 4G auction should benefit consumers rather than result in higher service prices.
Speaking at a Thammasat Economics Association seminar, he said there is a mechanism that will govern the pricing of voice and data services. 
Kirida Bhaopichitr, research director for the International Research and Advisory Service at Thailand Development Research Institute, said the NBTC’s regulation to cap 4G tariff rates to be lower than existing 3G service charges should limit the financial burden being passed on to customers because of the high 4G prices.

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