2100MHz auction raises USD1.35bn, only 3% above floor price

17 Oct 2012

Thailand’s National Broadcasting and Telecommunications Commission (NBTC) has completed a long-awaited auction of 2100MHz 3G mobile network operating licences, with all three domestic private sector cellcos winning concessions on 16 October with combined bids of THB41.63 billion (USD1.35 billion). Advanced Info Service (AIS), via subsidiary Advanced Wireless Network, Digital Total Access Communication (DTAC), through its DTAC Network unit, and True Corp subsidiary Real Future were the only companies which entered valid applications, each winning a maximum 2×15MHz frequency allocation. The recipients of the 15-year full ‘Type 3’ (infrastructure-based) licences will be officially announced by the NBTC within three days, and the permits will be formally awarded in January 2013 – after a 90-day period for bidders to meet obligations.

TeleGeography’s GlobalComms Database shows the NBTC allocated a total of 90MHz (nine lots of 2×5MHz) of UMTS spectrum, consisting of the bands 1920MHz-1965MHz paired with 2110MHz-2155MHz. The regulator divided the bandwidth into nine paired 5MHz slots, each carrying a minimum bid price of THB4.5 billion, making the minimum pricetag for each 2×15MHz licence THB13.5 billion. The bidder offering the highest price for their slots gained first choice over the actual spectrum range awarded. In the event, two slots were auctioned off at THB4.95 billion, one at THB4.725 billion and six at THB4.5 billion each, the Bangkok Post reported. Only AIS spent above the floor price, paying THB14.63 billion, while DTAC and True each paid the bare minimum THB13.5 billion. The combined final price was THB1.13 billion higher – or less than 3% higher – than the floor threshold.

All three operators intend to launch commercial 2100MHz networks in the first half of 2013 to break state-owned TOT’s monopoly in the frequency band. TOT also holds a 2×15MHz UMTS block (1965MHz-1980MHz, 2155MHz-2170MHz), although it has made slow progress in the market with its largely MVNO-based 3G business. The new Type 3 licences allow the privately-owned cellcos to operate outside of their existing revenue-sharing build-transfer-operate (BTO) concession framework, thereby incurring lower fees and other costs as well as taking full ownership of their own wireless spectrum and infrastructure. The much-delayed auction sees the Thai mobile sector finally catch up with liberalisation in other segments; since 2006 Thailand has issued full network operating licences for privately owned telecoms network operators in the internet and wireline sectors, says GlobalComms. As in the fixed line/broadband markets, AIS, DTAC and True have set up subsidiaries to operate as Type 3 licensees and deploy/operate networks separately from their BTO operations. True’s BTO concession runs out in 2013, followed by AIS’ in 2015 and DTAC’s in 2018, while TOT and sister telco CAT Telecom must transfer all BTO concession revenue directly to the government from December 2013 onwards.

The three cellcos previously indicated they had budgeted a combined total of approximately THB130 billion for 2100MHz network rollout over three years, while AIS and DTAC have discussed proposals for a jointly-owned 3G tower infrastructure company. The new projects will replace investment in the companies’ existing 800MHz-900MHz W-CDMA/HSPA services; AIS has offered 900MHz HSPA-based services since July 2011, and DTAC has provided similar services using 850MHz spectrum since August that year, both under BTO revenue-sharing conditions, while also since that month, True has partnered CAT to operate the ‘True Move H’ 850MHz HSPA network – although the public-private partnership has run into troubles surrounding the legality of its contracts.

Fears of a repeat of 2010’s aborted 3G auction – when lawsuits prevented licensing going ahead – were unfounded, although several petitioners did attempt to disrupt the proceedings at the last minute. The Central Administrative Court rejected a call for an injunction to suspend the auction from academic Anupap Tiralap, who gave grounds that the licensing terms lacked service quality stipulations including data fee caps and ‘universal’ 3G access, while a case filed by Green political activist Suriyasai Katasila – centering on the lack of real competition in the auction due to three parties bidding for three equal 2×15MHz portions leading to a low sale price – was deferred for subsequent inquiry by the same court. It is now thought likely that some form of investigation into potential price collusion will follow, given the sub-3% increment on the minimum level achieved by the auction.

The NBTC’s predecessor, the NTC, stated in mid-2010 that 2100MHz licences would permit the usage of ‘3.9G’ services, although the draft decisions of the former regulator were superseded by the NBTC’s regulations. The current watchdog has not made a formal public statement on the potential for usage of LTE in the 2100MHz band, whilst other auctions for spectrum in 4G-suitable bands including 1800MHz are in the pipeline.