AIS comes under fire from rivals over alleged price dumping

5 Oct 2006

Sigve Brekke, the chief executive of Thai cellco DTAC, has joined the CEO of rival operator True Move, Supachai Chearavanont, in condemning market leader AIS’ recent price undercutting as an abuse of its ‘significant market power’, reports the Bangkok Post. ‘In previous price wars, AIS was always the loser in terms of quarterly results,’ said Mr Brekke, adding: ‘DTAC reported an increase of 11.8% in first-half 2006 revenue, while True Move posted a contraction of 1.4% [compared to a 5% drop for AIS in the same period]. I’m disappointed in what AIS is doing now. I don’t understand why AIS didn’t learn from past experiences, when operators faced a drop in revenue while users faced connection difficulties.. I can guarantee that customers will not avoid network congestion problems because DTAC and True Move will be forced to fight back with more competitive promotions to keep our market shares.’ Mr Brekke also urged the regulator, the NTC, to get involved to resolve the problem.

Upon launching new lower tariffs this week, AIS expressed confidence that its network capacity could handle any sudden surge in call traffic – as long as the average voice call length was no more than seven minutes. It claims it now has the capacity to handle 20 million subscribers, expected to rise to 24 million by the end of the year, and that the successful connection rate for its customers making calls to other networks is 96% during off-peak periods. ‘We needed to go ahead with our undercutting promotions in order to win customers back to AIS services after losing big slices in the net new subscriber segment to DTAC and True Move,’ argued the company’s president Wichian Mektrakarn, who went on to say that ‘the move was also aimed at increasing our subscriber base to enhance our economies-of-scale advantage and offset a 5% contraction in AIS’s revenue in the first half of this year.’ DTAC and True Move were on the verge of petitioning the NTC over alleged price dumping by AIS, which is offering what they claim is a ‘subsidised rate’ – as low as THB1 (USD0.026) per call. Both said they plan to introduce new tariffs to match AIS’ flat rate offer.