4G rivals locked in showdown as bidding moves to fourth day

Bidding for the 900-megahertz spectrum dragged on inconclusively for a third day yesterday and into the night as contenders continued to battle for bandwidth believed to be in very limited supply in the future.

The auction clocked up 60 hours with combined offers exceeding 100 billion baht, which was unimaginable heading into the event.

The four contenders bid vigorously, eager to obtain the low-band spectrum that is so crucial to building a foundation for fourth-generation (4G) service and the future of their business.

As of 9pm, after 144 rounds of bidding over three days, bids worth 119.1 billion baht for the 900-MHz spectrum had been reserved for providing 4G wireless broadband service for 15 years.

The price for the first licence was 58.26 billion baht, 351.6% higher than the reserve price, while the price for the second licence stood at 60.84 billion baht, 371.6% higher.

The price of the 900-MHz licences reached 5.95 billion baht per MHz or 120.4% higher than the 2.7 billion baht per MHz for the 1800-MHz licences.

The reserve price for a 900-MHz licence is 12.9 billion baht or 80% of the estimated real spectrum value of 16.1 billion.

The record high bids made one industry observer wonder if the big three mobile operators were sending a message.

“This could be a strong signal that the three mobile operators, intentionally or not, are blocking the entry of new firms into the local mobile circle,” one industry veteran said.

The National Broadcasting and Telecommunications Commission (NBTC) set the reserve price for further auctions next year at a level closer to the recent winning prices in the 1800- and 900-MHz auctions.

“The bidding war can reflect strong confidence in the Thai telecommunications industry from foreign shareholders in the three major mobile operators,” said Col Settapong Malisuwan, chairman of the NBTC’s telecom committee.

Singapore Telecom is the major shareholder in mobile leader Advanced Info Service Plc (AIS) with a 23.3% stake.

Telenor of Norway holds the major share of Total Access Communication Plc (DTAC), while China Mobile holds an 18% stake in True Corporation.

The industry veteran said it is “do or die” for JAS Mobile Broadband Co to win a licence in order to complement its fixedline broadband service.

“It is strategically important in the evolution of JAS’s existing fixed-line business,” the source said. “Without a wireless broadband service, JAS’s survival in the business would be precarious.”

DTAC is also in dire need of a 900-MHz licence to boost shareholder and public confidence that Telenor intends to continue doing business in Thailand, as rumours suggesting it may leave the country have forced company executives to issue denials.

It missed out on most of the 1800-MHz marathon spectrum auctions last month, as the company quit the race after only seven rounds.

True Move wants to win a 900-MHz licence, as the third-ranked operator would prefer to have another band of its own to provide 3G and 4G service instead of renting an 850-MHz network from CAT Telecom under a wholesale-resell partnership agreement.

AIS is believed by most industry sources to be the highest bidder for the 900-MHz auctions, as it has the least amount of bandwidth and the deepest pockets.

With more than 40 million mobile subscribers, the most in the country, AIS needs as much bandwidth as possible to maintain its leadership in premium network coverage, the industry source said.

Col Settapong said bidders might feel uncertainty about whether the next spectrum auctions will take place over the next three years, as pledged by the national telecom regulator.

“Securing a 900-MHz licence will greatly ensure operators’ spectrum management plans,” he said.

The NBTC initially planned to auction 45 MHz of bandwidth on the 1800-MHz spectrum plus another 10 MHz on the 850-MHz spectrum, now used by DTAC under a concession regime due to expire in 2018.

Somkiat Tangkitvanich, chairman of the Thailand Development Research Institute, said the prized 1800- and 900-MHz licences would develop a new standard for the nation’s bidding projects in the future.

But the government needs to get the balance right between competitiveness and fair opportunities for all qualifying bidders to participate, he said.

Mr Somkiat said the NBTC must also ensure the 4G licences would not affect Thai consumers. He noted AIS won an 1800MHz licence for 40.9 billion baht, equal to company profits over only 1.13 years.

Previous governments allowed a handful of businessmen to pay low prices for the national resources they used including spectra, Mr Somkiat said.

He urged the government to implement two major measures to ensure competitive bids in the future — a competitive bidding process and creating a regulatory environment that welcomed new entries.

Col Settapong said 4G mobile networks would generate up to 400 billion baht for the overall economy and ICT-related businesses by 2017.

Operators need to have at least 50 MHz of mobile bandwidth within five years to accommodate skyrocketing mobile data use as smartphones proliferate.

“I believe the future 700-MHz spectrum may see much higher demand than 1800 MHz,” he said. “The NBTC will allocate telecom spectra to serve demand including 2600 MHz.”

Col Settapong said deployment of 4G networks would enhance Thailand’s ICT infrastructure development index. “We’re aiming at Thailand outpacing secondranked Singapore by 2017 and becoming the regional leader by 2020,” he said.