Telecoms relief plan draws flak
Cabinet to consider proposal tomorrow
Opposition to the controversial relief plan allowing two telecom operators to extend payment for the 900-megahertz mobile spectrum has intensified ahead of the cabinet meeting tomorrow.
The cabinet is expected to consider the proposal tomorrow after Prime Minister Prayut Chan-o-cha put the brakes on it two weeks ago following criticism by the Thailand Development Research Institute (TDRI). The prime minister asked the NBTC for a written explanation how the relief plan benefits the public.
The NBTC last week submitted its justification to the cabinet, claiming the state will earn 3.6 billion baht from Advanced Info Service Plc (AIS) and True Corp as the operators will pay a 1.5% interest rate per year for the proposed five-year extension of their payment for the mobile spectrum, instead of lump sums in 2019 worth 59.5 and 60.2 billion baht respectively.
By allowing them to pay in instalments, the pair can free up funds to bid for the upcoming 1800MHz spectrum, instead of leaving it to third-ranked Total Access Communication Plc (Dtac), the sole contender, according to the telecom regulator. The NBTC move followed calls by AIS and True to seek more generous payment terms from the government through the use of Section 44.
TDRI president Somkiat Tangkitvanich yesterday criticised the relief plan, describing it as “strange logic” by the NBTC, apparently aimed at “carrying” the operators, as the pair have had shown no signs of financial difficulties running their businesses.
AIS has the largest market share with profits last year of 30 billion baht, while True, despite being far behind AIS, saw profits of 2.3 billion baht last year. The company’s market share also increased significantly.
“If they are unable to pay in lump sums, they should be fined at a punitive rate of 15% a year stipulated in the contract, not the 1.5% the NBTC hopes to get,” Mr Somkiat posted on Facebook.
Mr Somkiat also rejected the NBTC’s claim that by extending the payments, both operators might take part in a planned auction of 1800 MHZ spectrum and the country would stand to benefit.
He said there was no word from the telecom firms on the issue and noted that it would even damage the country’s credibility further if the payment extension was introduced in exchange for their participation in the planned auction.
Instead of taking place with transparency and in line with market mechanisms, the auction would be taking place as a result of negotiations,” he said.
“What’s more important than investors’ confidence in a company is national credibility. If the government changes its policy, rules or conditions because of an unreasonable demand by some operators, it will tarnish the country’s image.”
Meanwhile, activists also slammed a proposal to use Section 44 to help the telecom operators. “The companies have no difficulty doing their businesses as both dominate the Thai telecom market. Therefore, there’s no reason to provide them with assistance by offering them an interest rate of only 1.5%,” former senator Rosana Tositrakul told a seminar on the issue yesterday.
“The public will not let you [NCPO] do this. They will question the legitimacy of the NCPO and its limitless use of Section 44 on the matter. If you don’t stop it, this will have consequences.”
Supinya Klangnarong, an activist and a former NBTC member, said the state was already at a disadvantage in 3G bidding, so it should make sure it benefits fully from the 4G auction. She also said it does not make sense to claim the government should help the telecom operators just as it plans to do for digital TV operators. Most of the TV operators recorded severe losses from licence payments, partly stemming from regulatory risk as opposed to the normal business risk which the two telecom giants are facing.
The seminar concluded the public is now questioning the real intention of the government’s move to provide assistance for the two telecom giants and that the plan might have been put up in exchange for some kind of mutual favour.
True Corporation chief Suphachai Chearavanont says the telecommunications industry should be treated on an equal footing with the digital TV sector, if the state decides to push forward with its aid for broadcast operators.
“Telecom and digital TV both use the country’s frequency, and both participated in licence auctions that were unduly high,” Mr Suphachai, chairman of the executive committee of True Corporation, told the Bangkok Post. “Prices for 2015’s 4G spectrum auction were the second-highest in the world, after the US.
“It’s about fairness and preventing discrimination. If the government gives assistance to digital TV operators, then True Move and Advanced Info Service [AIS], winners of the 4G licence auction, should get assistance too.”
He says digital TV licences and the 900-megahertz licences are “critically” similar.
Both auctions resulted in unduly high winning prices, Mr Suphachai says. The winning prices of the 900MHz licence auction in 2015 were the highest winning prices in Asia and the second highest in the world, after the US (taking into account per capita income).
Secondly, both procedures auctioned the right to use spectrum, a national resource, to provide services.
Thirdly, digital TV and 900MHz licence holders both have varying degrees of financial strength.
Several TV operators are in a position to pay for licences, while others cannot afford to do so. In the same way, AIS has higher cash flow than True Move, Mr Suphachai says.
“I don’t want to comment on whether AIS or True Move are in a position to liquidate the last 60 billion baht of licence payments in 2020, but I insist this policy must be considered unfair and discriminatory,” he says.
AIS and True Move have asked the government to break down the last payment into five yearly instalments (from 2020 to 2024), with a 1.5% interest rate payable to the state for the extension period. AIS and True Move are due to pay the last instalments of 59.5 billion and 60.2 billion baht in 2019, respectively.
“We did not ask for a reduction in the payment amount. Neither are we defaulting,” Mr Suphachai says.
At first the two firms asked for a 10-year payment extension, settling on a five-year term with the state.
High winning licence prices, digital media, an oversupply of channels and declining ad revenue are some of the factors threatening TV operators, Mr Suphachai says.
High winning prices in the 900MHz auction were mainly driven by JAS Mobile Broadband, which secured a licence slot but failed to make the first licence payment in March 2016.
JAS had its slot and a 645-million-baht deposit guarantee confiscated, and the company was ordered to pay a 200-million-baht fine.
The willingness to grant True Move governmental assistance will be a significant factor in the company’s decision on whether to join the planned 1800MHzspectrum auction, Mr Suphachai says.
The 1800MHz spectrum range is now operated by Total Access Communication (DTAC) under a concession from state-owned telecom enterprise CAT Telecom, which is due to expire on Sept 30. The spectrum provides 90MHz of bandwidth for upload and download (or 45x2 MHz).
“True Move has enough bandwidth to meet customer demand over the next two years,” Mr Suphachai says.
True Move operates 3G and 4G services through the 850-, 900-, 1800- and 2100MHz spectra.
Mr Suphachai says he supports the existing NBTC’s 1800MHz auction draft, which sets a 37.45 billion reserve price (for 30MHz of bandwidth upload and download). The price, based on the winning price of the 2015 1800MHz auction, ensures that operators pay the same price for their licences.
“For True Move and AIS, it is not a matter of whether the 1800MHz auction will be delayed or be held before their concessions expire in September,” he says, adding that no spectrum ranges under concession were reallocated via auction before their expiry.
The 1800MHz spectrum, previously operated by AIS subsidiary Digital Phone and True Move, was auctioned in 2015, two years after the concession under CAT Telecom expired.
The 900MHz licence previously run by AIS was auctioned in December 2015 — three months after its concession expired.