Thai 4G Auction Uncertainty

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.

No Unequivocal Authority over Spectrum Auctions

  • Responsibility for the auctions ostensibly falls to the National Broadcasting and Telecommunications Commission (NBTC). But NBTC authority was established by a constitution that the current military junta tore up, calling into question the legal standing of NBTC. This could open up to legal challenge any decision made by NBTC.
  • The Information and Communications Minister, Uttama Savanayana, has made statements regarding auction status and terms. There is uncertainty about whose statements take precedence, those of the ICT Minister or those of the NBTC.
  • Finally, the Digital Economy Commission (DEC), chaired by the Prime Minister himself, also has been tasked with oversight and review of the auctions. If Prime Minister General Chan-O-ocha is involved ultimately he will have the final say over the auctions. Which means the outcome is political, not commercial.

These are hardly the best conditions for mobile operators to determine how to spend roughly 30 – 40 billion Baht (USD 1 billion).

Opaque Spectrum Planning

  • The structure of spectrum licenses being offered continues to change. The 1800 MHz license size has repeatedly been changed between 12.5 MHz and 15 MHz. Just yesterday another “decision” was announced.
  • License terms have changed, too, from 19 to 18 years. This change uselessly complicates any valuation analysis the potential bidders must conduct.
  • There have been discussions of auctions in the 2.4 GHz and 2.6 GHz spectrum. But no roadmap has been published, which makes it impossible for the operators to conduct any kind of longer term plan.

Spectrum is like oxygen for mobile operators, so they are intensely interested in it.  This continuing uncertainty makes it very difficult for the operators to offer the best services to the people of Thailand.

Other Legal Uncertainty

  • The government has for years been trying to change the Thai mobiles market from a concession arrangement to a license fee arrangement. The concession holders are state-owned enterprises CAT and TOT, to whom concessionaire mobile operators pay approximately 30% of their revenue. This has not been completely resolved; some disagreements are working their way through the courts. These disagreements are further encumbering the spectrum.
  • TOT and CAT recently said they would ignore the government and keep the spectrum they already have.
  • TOT has been promised a gift of 20 MHz spectrum. But the constitution demands that all spectrum be auctioned.
  • The TOT labor union has begun lobbying publicly for TOT to be allowed to keep their spectrum.

I wish I were able to say “here’s how the auctions ought to be run.” But I can’t. Fortunately, help appears to have arrived. Last week the Norwegian Communications Authority, Nkom, signed an MOU with the NBTC regarding regulation of telecommunications industry. The first point of the MOU is for cooperation regarding “Management and Allocation of Radio Spectrum”. It is to be hoped that such cooperation will yield a more favorable environment for the auction of this spectrum.