TDRI chief: Giants don’t qualify for relief plan
Thailand Development Research Institute (TDRI) chairman Somkiat Tangkitvanich has voiced opposition to a plan aimed at granting five-year extensions for the payment of final instalments in the 900-MHz band licence auction.
The extension, worth a total of 120 billion baht, would benefit the two licence winners. He said the national telecom regulator should develop regulations that ensure good governance and support all players instead of entering into negotiations with only a few.
Mr Somkiat said he disagreed with the relief package for the two winners of the 900-MHz licence auction planned by the National Broadcasting and Telecommunications Commission (NBTC), which is urging the government to invoke Section 44 to ease the financial burden of the two companies.
He said Advanced Info Service (AIS) and True Move did not deserve such assistance because they knew the risks involved when they put in the bids for the 900-MHz licences. “Both AIS and True operate mobile services at a profit and are capable of making the licence payments of 60 billion baht each,” he added.
Last year, AIS reportedly posted a profit of 30 billion baht, while True Move made 2.3 billion baht. True Move had a revenue share of 18.8% of the local mobile market in 2015, which increased to 26% in 2017 thanks to attractive packages the service provider offered to draw new subscribers.
Mr Somkiat said AIS and True Move are both capable of paying off their fees, adding they might have to borrow from banks or increase their registered capital, but that was the business of the two telecommunication giants.
AIS and True Move jointly asked the government late last year to invoke Section 44 and extend the terms of their licence payments for 2019, when two firms are due to pay the last instalment of 60 billion baht each to the state.
AIS won the 900-Mhz licence with a bid of 75.65 billion baht, while True Move claimed another at 76.29 billion baht. They have already paid 8.04 billion baht each in 2016 and 4.02 billion baht apiece in 2017.
AIS and True Move are due to pay the third instalment of 4.02 billion baht each in 2018. However, the last payment in 2019 would cost AIS 59.5 billion baht while True Move would have to pay 60.2 billion baht.
NBTC has advised the National Council for Peace and Order (NCPO) to support the companies’ requests to break down the last payment into another set of five yearly instalments (2020-2024) with a 1.5% interest rate payable to the state for the extension period.
Recently, NBTC secretary-general Takorn Tantasith said the relief for AIS and True Move will encourage the companies to join the planned auction of 1800-MHz licences this year and generate more than 100 billion for the state.
Mr Somkiat said remarks that the two companies would join the bidding process at the next auction after they have received the assistance were only hypothetical.
“Who’ll be held responsible if [they] get the extension and don’t join the auction? Who’ll compensate for the losses caused by this false assumption?” queried Mr Somkiat.
He added that several conditions in the regulations governing mobile operators and service providers had changed and were unstable, thus failing to ensure fairness for all players in the market.
Telenor chief executive Sigve Brekke is pressing the government to grant payment extension facilities for future auctions if it decides to use Section 44 to relax the licence payment terms of Advanced Info Service (AIS) and True Move, the winners of the 2015 auctions.
Mr Brekke met Deputy Prime Minister Somkid Jatusripitak yesterday to discuss some of the most pressing issues for Telenor’s Thai mobile operating unit, Total Access Communication (DTAC). The first issue was the government’s plan to invoke Section 44 to extend the winners’ final licence payments over five years.
Somkiat Tungkitvanich, chairman of the Thailand Development Research Institute, previously pushed against using the executive order, saying AIS and True Move, which still owe 60 billion baht each, had decided to push forward with their auction bids in spite of the inflated price.
Mr Brekke urged the government to introduce a similar extension mechanism for the upcoming auction if it decides to go ahead with the payment extensions of AIS and True Move.
“I don’t want to say if it is fair or not, but it definitely makes the last auction look more attractive in retrospect,” he said. “Mr Somkid did not give me any guarantees, but said he would bring our concerns to TOT Plc and to the government.”
Mr Brekke also urged Mr Somkid to help speed DTAC’s partnership deal with TOT on the 2300-megahertz spectrum, noting that the delay is causing TOT to forgo 400 million baht a month in network leasing revenue. The deal has yet to be approved by the attorney-general.
The meeting came a few months after True surpassed DTAC as the secondlargest mobile operator and three weeks after DTAC’s head, Lars Norling, posted his resignation.
Mr Brekke said he is in talks with four or five candidates, both Thais and foreigners, to succeed Mr Norling, who is scheduled to depart on Sept 1.
DTAC has slashed its workforce and cut its marketing budget to prop up the bottom line. The company’s lean strategy is an attempt to emulate digital service providers, which the company considers future competitors, Mr Brekke said.
DTAC is also facing the possibility that the planned 1800- and 850MHz auctions will not take place before its 2G mobile licence expires in September. Mr Brekke said DTAC’s customers will experience uninterrupted services.
But the service revenue generated between September and the date on which DTAC secures its next 1800MHz spectrum licence will accrue to the National Broadcasting and Telecommunications Commission (NBTC).
Mr Brekke said the company is financially prepared to wait for the auction, even if the delay is longer than expected. “True remained in that state for two years, and AIS faces a similar situation,” he said.
The problem, he said, is that the NBTC keeps changing its mind on the 1800MHz auction design: “The regulator seemed to have finally relented to the industry’s efforts to shift the auctioned block size from 15MHz to a 5MHz licensing scheme. Days later, the NBTC came out saying that it had gone back to the 15MHz scheme again.”
There is no clarity in terms of the 850MHz spectrum auction either, he said.
Most developed countries’ auction spectrum is in 5MHz or even 1MHz blocks, which gives industry players more flexibility. Restricting the auction to larger blocks results in an artificial scarcity of spectrum and higher prices. “Even AIS and True may only need 10MHz each,” Mr Brekke said.
“They ask me if DTAC will stay in the Thai market,” said Mr Brekke, who served as DTAC chief executive from 2002 to 2008. “We have been here for 18 years, and we have faced hard times, but we always come back. In fact, DTAC is our group’s second-largest market [in terms of revenue] after Norway.”
DTAC, he said, is stockpiling cash for the coming transition into more dataheavy and tailored packages. While DTAC has lost share in the market as a whole, it has won a few percentage points in the postpaid sector, according to Mr Brekke.
Thai consumers are already the heaviest data users in the world, at 6GB per month, compared with 3GB a month in Norway.
“Today Thailand looks more like Norway than other markets in the region,” Mr Brekke said. “Myanmar is what Thailand used to be 10 years ago.”
Thailand already serves as the group’s testing ground for digital technologies. This year, for example, the company is rolling out services like Line Mobile, introduced in Thailand last year, in Malaysia and Bangladesh.