True Corp. Pcl and Jasmine International Pcl will pay $4.2 billion for licenses to provide fourth-generation wireless services in Thailand after outbidding larger rivals Advanced Info Service Pcl and Total Access Communication Pcl in an auction in Bangkok that ran for almost four days.
True topped the bidding for the 900MHz spectrum with 76.3 billion baht ($2.11 billion) and Jasmine’s bid was valued at 75.7 billion baht, the regulator said. Total Access had the most to lose, because Advanced Info and True won licenses to offer 4G services on the 1,800MHz spectrum at a similar auction last month.
The result may surprise investors who expected Advanced Info and Total Access to leverage their stronger balance sheets to accelerate their 4G network expansion and grab a larger share of the market for mobile data in Thailand, which had about 86 million mobile-phone subscribers as of September. Shares of Total Access slumped 16 percent this week as investors judged that the high bid costs could erode earnings.
“Making a good return from the investment will be a struggle, so this could be the classic case of a winner’s curse,” said Maria Lapiz, an analyst at Maybank Kim Eng Securities (Thailand) Pcl. Average revenue per user will remain under pressure in 2016 as Thailand’s slowing economy limits demand for more costly mobile data services, she said.
Faster Networks :
Total Access has three years before its current license expires, NBTC commissioner Prawit Leesatapornwongsa told reporters early on Saturday.
“It has to work on marketing strategies, and seek new frequency, and it can bid when its license expires in 2018,” Prawit said.
Customers will start moving to the new faster networks in February, and the number of 4G subscribers will reach 20 million by the end of next year, according to the NBTC. The auction was also a windfall for the country’s military government, which has pledged to use the $6.5 billion raised in recent months to help farmers cope with a crippling drought and slumping crop prices.
Thai companies began offering 3G services in mid-2013 after eight years of delays caused by legal battles and regulatory wrangling. In 2012, the Thai telecom regulator raised 41.6 billion baht in an auction for licenses of third-generation cellular services. Advanced Info, Total Access and True won those licenses. Total Access and True had already started offering services at speeds approaching 4G using existing spectrum.
“It will help drive Thailand toward the digital economy,” Minister of Information and Communication Technology Uttama Savanayana told reporters Friday in Bangkok. “Proceeds from the auction will also benefit all sectors in Thailand.”