Multiple factors drive fierce bidding for 900MHz licences
By press time, the total bid for two 900-megahertz licences was already far higher than for two 1,800MHz licences auctioned last month.
This was attributed to the technical aspects of the spectrum put up for auction this week, the shortage of available low-spectrum bands, and the reported attempts of some bidders to drive up the price at the expense of the eventual winners of the licences.
But above all, the high price reflects strong commitment of the bidders’ foreign strategic partners to invest heavily in Thailand and that they are here to stay, said Korkij Danchaivichit, deputy secretary-general of the National Broadcasting and Telecommunications Commission.
As of 4.55pm, the combined bid for the two 900MHz licences on offer stood at Bt111.702 billion, versus the final combined price of Bt80.778 billion of the two 1,800MHz licences sold in November. As of the press time the bidding was still going on.
The NBTC started the 900MHz auction on Tuesday.
The 900MHz spectrum can technically serve wide areas upcountry on a cost-effective basis when compared with upper bands like 1,800MHz.
The telecom sector has experienced a scarcity of the low-band spectra available for auction. The 900MHz spectrum is the last low-band spectrum that can be put up for auction right now.
While the concession of another low-band spectrum, the 850MHz band held by of Total Access Communication (DTAC), will end in 2018, the NBTC has already assigned that spectrum for providing communications services on the planned high-speed railways.
Thailand has a 700MHz band but it is being used by analog TV broadcasters, such as Channel TV 7. Channel 7’s concession will not expire until 2023, when the NBTC can reclaim its spectrum for reallocation.
An NBTC official said that as no one could advise the telecom operators when any other low bands would be available for auction, the bidders could not afford to wait but had to compete brutally to snatch these 900MHz licences.
Winning the 900MHz licences is also a matter of life and death for some bidders. Though Advanced Wireless Network of Advanced Info Service already obtained a 1,800MHz licence at last month’s auction, AIS still needs a licence for the 900MHz spectrum to reinforce its service. It currently has around 46 million subscribers.
"As the No 1 player, AIS cannot also afford to lose this game. Its marketing position will definitely be hit hard if it loses out in this bid," said an AIS source.
According to a telecom analyst, if DTAC Trinet loses out, its parent Total Access Communication will have to continue mainly using its existing 1,800MHz and 850MHz bandwidth to serve customers. That would result in a sharp rise in regulatory fees and depreciation expenses, which could cut DTAC’s 2016 earnings by 50 per cent and result in losses in 2017.
DTAC’s 1,800MHz and 850MHz concessions will expire in 2018. Currently DTAC has around 25 million subscribers.
Jas Mobile Broadband of Jasmine International is keen to grab a licence to make its entry into the wireless-broadband market. Given its failure to win a 1,800MHz licence last month, this is its last chance to snatch the much-needed passport to the market.
So it is not surprising the competition at the NBTC’s telecom-licence auctions has been intensifying, as it is not only competition among the three incumbent operators but between them on the one side and Jas on the other, as they battle to prevent Jas from becoming the fourth market player.
True seems to be the one with the least need for a 900MHz licence, as it has a lot of bandwidth on multiple spectra. It just clinched a 1,800MHz licence in last month’s auction.
A telecom industry observer questioned whether some bidders had attempted to drive up the 900MHz price to a high level so the eventual winners would end up paying exorbitantly high final prices and experiencing high operating costs, which would hurt their competitiveness.Prawit Leesatapornwongsa, a member of the NBTC telecom committee, believes all four bidders are willing to pay a high price for the 900MHz licences.
He added that one reason the bidders dared to compete fiercely was the flexible upfront payment schedule for the 900MHz licences.
The bid winners can pay an instalment of only Bt8.04 billion in the first year, Bt4.02 billion each in the second and third instalments, and the rest in the final year. This is unlike the schedule for the 1,800MHz licences, where they have to pay 50 per cent upfront in the first year and 25 per cent in the second and third years.
