Thailand take steps toward 3G licences, risks remain

* Base prices at $138 mln for 10 MHz/$156 mln for 15 MHz

* Consults with legal experts on licencing authority

* Shares underperform on concerns over possible delay (Recasts, adds quotes, details)

BANGKOK, Oct 21 (Reuters) – While some countries are introducing fourth-generation (4G) data mobile-phone technology, Thailand is on the cusp of going 3G, but the shift promises a radical overhaul that could shake up the $4.7 billion industry.

Thailand’s telecoms regulator set reserve prices on Wednesday for a long-awaited auction of 3G mobile-phone licenses, a crucial step in introducing long-delayed reforms to the sector, saying the auctions should generate about $1.2 billion.

The reserve price, the minimum Thailand expects to receive in each of four licence auctions, will start at 4.6 billion baht ($138 million) for each of three licences for 10 MHz bandwidth, and 5.2 billion baht ($156 million) for a 15 MHz bandwidth.

3G services would allow operators to tap new revenue sources in a country of 67 million people where almost everyone has a mobile phone.

But analysts say the process could still get derailed. And investors are already cautious after repeated delays, prompting Thai telecoms stocks to underperform the market this year.

The technology allows users to surf the Internet faster and easily download music to handsets, but in Thailand it could also change the way operators pay regulatory fees, cut costs and level the playing field between state companies and private industry.

Thailand has been struggling with the deregulation of its telecoms industry since before the 1997-1998 Asian economic crisis. Progress has been painfully slow and strewn with political obstacles including multiple changes in government.

The highly regulated industry is run through a complicated “concession”, or revenue-sharing, system.

Under the current system, which most of Asia has done away with, operators pay a proportion of revenue to state-owned companies for the right to run networks and then transfer those networks to the government when the concession expires.

This favours Thailand’s big state-owned telecommunications groups, TOT Thailand and CAT Telecom.

But the 3G licences should change that, providing an opportunity not only for incumbents but also for new entrants, said the National Telecommunications Commission (NTC), the industry regulator.


The regulator would open the auction mid-December as planned for four licences with 15-year terms. Prices will be announced on the NTC’s website next week before a second round of public hearings on Nov. 12.

“We should get about 40 billion baht ($1.2 billion) altogether from the bidding of the four licences,” Prasert Apipunya, NTC deputy-secretary general, told reporters.

Prasert, however, said the NTC was consulting with the government’s legal agency over whether it has authority to hold the auction, a move that analysts say could bring it to a halt.

The top three telecoms operators want to join the auction, including leader Advanced Info Service (ADVA.BK), second-ranked Total Access Communication DTAC.BK and True Move, a subsidiary of True Corp TRUE.BK.

Independent researchers NERA Economic Consulting estimates it would take around nine years for 3G operators to break even.

AIS shares were down 6.7 percent over the last month, underperforming a 1.7 percent rise of the main index. TAC shares lost nearly 6 percent.

Foreign investors, who are keen to join the auction, are required to form a joint venture with a Thai company since Thai telecoms laws limit foreign holdings in companies in the sector to 49 percent, the regulator has said.

Telecoms service consumption contributes three percent of Thailand’s gross domestic product, and investment of about $1.5 billion is expected to flow into the sector within the next three years, according to documents provided by the NTC. ($ = 33.40 Baht) (Editing by Jason Szep)

Source: Reuters


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