Delays to Thailand's 3G License Auction Could Damage Investor Confidence

­Thailand's DTAC has warned that any further delays to the country's 3G license auction could deter foreign investment and undermine the credibility of government policy. DTAC's CEO, Tore Johnsen, added though that he expects any delays to be just a few weeks.

Mr Johnsen also argued that the reserve price for a 3G licence should be between 2 billion and 4 billion baht, not the 10 billion set by the NTC. "The price is unreasonably high and tarnishes free and fair competition rules,'' he told the Bangkok Post.

In total four licenses will be offered, with three of 10 Mhz and a fourth with 15Mhz of radio spectrum, and a reserve price of between US$100-US$200 million. The auction is expected to take place in December, although several unions are opposing the auction on technical grounds relating to the make-up of the regulatory bodies.

Mr Johnsen also suggested the NTC change the payment terms for 3G licences from a lump-sum to only half of the fee first and then installments over 10 years or over the whole life of the concession. "This will give TOT and CAT Telcom a revenue stream on a yearly basis, while easing private operators' financial burden,'' he added, referring to state telecom enterprises that rely heavily on concession revenues from private operators.

In related news, True Corporation, the parent company of the mobile operator True Move says that it is ready for the auction and has shareholder support for a US$200 million investment in its 3G network over a three-year period.

"We will fight until the end, until the last breath, to win a 3G licence no matter how high the bid prices will go and with an unlimited budget," said CEO Supachai Chearavanont.

The incumbent operators are already running small trials of 3G networks over their existing GSM radio spectrum, while CDMA operator, CAT Telecom is seeking an overseas investor to assist in 3G rollout plans.

Debt ratings agency, Fitch recently said that despite the high capex - the key benefit of the 3G licence is lower regulatory costs - which should boost the operators' profit margin over the medium-to-long-term.

On the web: Bangkok Post - National Telecommunications Commission

Posted to the site on 18th October 2009