Yesterday Bangkok Post reported that Thailand’s largest mobile operator, Advanced Information Services, AIS, had agreed to participate in the re-auction of a single license of 10 MHz bandwidth in the 900 MHz spectrum. This is the license that JAS Mobile won in the auction last December and then forfeited by not making the first payment in March. The article says that AIS’ auction participation was “in exchange for an extension of the right to retain [AIS’] existing 400,000-strong 2G customer base”. This quid pro quo intrigued me, so let’s draft a business case together to understand the money. Continue reading
After weeks of relative quiet in the #Thai4G Spectrum story today there is interesting news. Joseph Waring at Mobile World Live gives the details.
Essentially, here is the recap:
- The spectrum won by by Jas Mobile in the NBTC 900 MHz auction last December, then forfeited for non-payment, will be re-auctioned by order of the Thai Prime Minister’s Digital Economy Commission.
- JAS Mobile has been barred from participating, though they have ben given the privilege of paying the costs of the re-auction. Not much word from JAS since this transpired.
- Thai Operator Dtac has said they are not interested to participate, probably hoping to acquire spectrum at more sensible prices in a couple years. Maybe by then the Thai government will have published a spectrum roadmap.
- True Move has only recently declined to participate in the auction. After paying THB75Billion for another license this seems the smarter play. Doubling down on a second license would saddle True with tremendous debt. And this is serious debt relative to any normal Mobile industry metric.
- One such metric is the cost per MHz-POP, in other words, how much did the license cost relative to the amount of a spectrum and the number of possible subscribers?
- The price True paid for the other license is comparable to some of the higher western rates, around USD1.6/MHz-POP. But in Western countries there is another metric, ARPU, or Average monthly Revenue pre Subscriber, which is near USD40 and sometimes higher. Here in Thailand ARPU is closer to USD6. Another way to look at that is that True’s spectrum debt is 7 times higher than western counterparts. That level of debt will be very challenging to service, so avoiding this re-auction is a better plan.
So the only auction participant remaining is Ais, Thailand’s largest Mobile Operator. Ais won no licenses in the 2 earlier auctions, and with their 4G traffic growing in leaps and bounds, they should have their eyes on preventing network congestion.
As with the initial spectrum auctions, questions now turn to the rules governing the process. What kind of auction can be had with only a single participant? How firm is the rule that the license price this time must be no less than the price previously bid? If that rule were to be relaxed, how might the other operators be given another chance to bid? Since the last auction, has the Thai government learned anything about letters of credit or surety bonds? Speaking of the government, is anyone checking into which pockets True’s license fee is going?
These are a small sample of questions. Feel free to suggest more in the comments.
Having won a 900 MHz license Jasmine Mobile (JAS) must now build a mobile network and launch their service. Everyone is asking “When will JAS launch 4G service?”
Of course, JAS wants to launch as quickly as possible. The Finance department is especially keen to begin collecting revenue so that loans can be serviced. With a THB70 Billion license fee, interest alone is likely around 6 Million/day. JAS aspires to attract 2 Million subscribers in the 1st year of service. Assuming ARPU of 200 and Churn of 10%, that represents revenue of around 11 Million/day. Put those 2 together and every day Launch is delayed or accelerated costs or benefits JAS 17 Million! 17 Million here and there and pretty soon you’re talking real money. So there will be tremendous pressure to get the network into service as quickly as possible. Continue reading
The long-awaited, continually challenged, frequently changed and oft-delayed auction of 1800 MHz spectrum in Thailand was finally held Wednesday, November 11. Both AIS and True Move won 15 MHz licenses. Total receipts for the Thai government were almost 81 billion Thai Baht (USD 2.25 billion.)
Read coverage of the story at these links:
- The Nation
- Bangkok Post
- Don Sambandaraksa at TelecomAsia
- Joseph Waring at Mobile World Live
- Total Telecom weighs in with coverage of Dtac’s failure to win a license
- Bangkok Post surveys all the bidders
Update 24 November. More sources with stories about the Thai auctions.
900 MHz licenses are expected to be auctioned next month now that a possible legal challenge from CAT has been thwarted. Bangkok Post reports on the deal. The same for companies, Dtac, True Move, Ais and Jasmine International have signed up to participate in the 900 MHz auctions for 2 licenses of 10 MHz.
As you try to manage your career and get ahead in your world, simple rules can be helpful. I take inspiration from the American TV drama “NCIS” which features “Gibbs’ Rules” as a running theme throughout the show. It occurs to me that there may be many comparable rules in business and in life. Here is one that which is frequently illustrated in business, usually inadvertently. Continue reading
I’ve been analyzing the announced bidders for the Thai 4G spectrum auctions. Maybe you’ve already read “Thai 4G Auction Bid Strategies – Jasmine”. When evaluating the positions of the 3 incumbent mobile operators the situation is especially complex. Much of this complexity is due to uncertainty about the auction rules and legal conditions. This uncertainty falls into 3 main categories. Continue reading
Six companies have picked up bidding documents for the Thai 4G spectrum auctions: Advanced Wireless Network (AIS); DTAC TriNet and DTAC Broadband; True Move H Universal Communication and Hutchison Telecommunications (Thailand); and Jas Mobile Broadband. With the endless changes and back and forth (we’ve already written about the uncertainty being created) the bidders must factor into their strategy the unreliability of the regulator. Continue reading