While brokerage houses believe the subsidiaries of Advanced Info Service (AIS) and Total Access Communication (DTAC) stand the best chance of winning the two 3G spectrum licences available this month, a telecom industrialist yesterday said True Corp's subsidiary would put up a fierce fight in the overall race and also emerge as an eventual winner.
A third licence will be auctioned in a second round if there are three qualified bidders in round one.
Brokerages put the likely firstround licensing success of the AIS and DTAC subsidiaries down to the financial clout of their parent companies.
The three bidders for the two 3G2.1GHz spectrum licences initially up for grabs are AIS subsidiary Advanced Wireless Network (AWN), DTAC subsidiary DTAC Internet Service and True Corp subsidiary Real Move.
The National Telecommunications Commission (NTC) will hold the auction on September 20, with a starting bid price of Bt12.8 billion per licence.
According to Thanachart Securities, AWN and DTAC Internet Service have a high chance of clinching the two licences in this round. If this proved to be the case and Real Move had to wait to bid for the third licence in the second round, True would have to start its 3G service development three months after its competitors.
The three bidders will now go through the prequalification process and the NTC will announce the names of the qualified bidders on September 14. If there are three qualified bidders, the watchdog will auction only two licences, in accordance with its auction rules known as N1. It will then call an auction for the third 3G licence within 90 days of the first auction.
Asia Plus Securities also believes AWN and DTAC Internet Service will each land a licence in the first auction, due to their parents' financial strength.
AIS has a low net gearing of 0.32 and ebitda (earnings before interest, taxes, depreciation and amortisation) of Bt46 billion. DTAC's net gearing is 0.08 and its ebitda is Bt20 billion.
True has a high net gearing of 6.3 and the group's ebitda is more than Bt20 billion. The True group recently appointed Siam Commercial Bank as its financial adviser and lead arranger to support development of its planned 3G2.1GHz wireless broadband service.
In DBS Vickers Securities (Thailand)'s view, although all three contenders could fail to land a licence in the first round, the market would perceive that True had the highest risk of failure, given its weaker financial position.
A telecom industrialist said AIS and True Corp had a greater motivation to win licences than DTAC.
The industrialist reasoned that AIS needed a licence because, if its existing business under a TOT concession experienced any negative impact from the Supreme Court's ruling in February on the assetsseizure case concerning ousted prime minister Thaksin Shinawatra, it would still have business to operate under the new 3G licence.
As part of what it ruled as abuse of power by Thaksin, the court cited that TOT, which owns AIS's concession, had amended the concession in 2001 to reduce AIS's revenue share from prepaid call service to a flat rate from 2001 until the end of the concession period. The rate had until then been an incremental one.
However, True is also in dire need of a licence to ensure it still has business to operate after its own concession ends in 2013. It also needs to provide the 3G service to foster its convergent telecom services.
The industrialist is unsure whether DTAC would fight fiercely for a licence in the opening round. Its concession ends in 2018 and the group could opt to focus on further developing 3G service on its 850MHz spectrum.
DTAC is waiting for the joint stateprivate panel set up under Article 22 of the PublicPrivate Joint Venture Act to allow it to launch a commercial 3G850 MHz service.
True's share price yesterday closed at Bt6.60, down 9.59 per cent, while that of DTAC closed at Bt46.50, down 4.62 per cent on the day, and that of AIS ended at Bt92.25, down 0.81 per cent.
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NTCmember application process underway
The selection of three new members of the National Telecommunications Commission (NTC) is expected to be completed by November, selection panel chairman Thanirat Siripachana said yesterday.
The panel expects to be able to submit the names of the final six candidates for the Senate's consideration before the current parliamentary session closes in November.
The application process began yesterday, with September 22 as the deadline.
The sixyear terms of NTC chairman Prasit Prapinmongkolkarn and commissioners Sudharma Yoonaidharma and Suchart Suchatvejapoom expire at the end of September.
Thanirat said his committee would halt the selection process once the bill governing the formation of the National Broadcasting and Telecommunications Commission (NBTC) becomes law.
The Senate, which passed the NBTC bill in its second and third readings in June, with some major amendments, has forwarded the bill to the House of Representatives, which has yet to consider it. The House and the Senate are expected to set up a joint committee to vet the amended bill.