TOT Plc plans to seek bank guarantees from the winning bidders on a partnership project to provide fourth-generation (4G) wireless broadband service on the state telecom enterprise's network.
The amount of the guarantee would account for at least half of the total projected revenue each bidder proposed to TOT throughout the contract lasting to 2025, a TOT source said.
The source said the financial guarantee is to ensure that winning companies can generate total revenue equal to the figures they commit to in their bid proposals to jointly provide 4G service on TOT's 2300-megahertz network.
"TOT might confiscate the guarantee if a winning company fails to generate projected revenue as promised," said the source, who asked not to be named.
TOT was given the green light from the National Broadcasting and Telecommunications Commission (NBTC) in October 2015 to develop 4G service on 60MHz of bandwidth on the 2300MHz spectrum until 2025.
It began seeking prospective partners earlier this year to take part in the state's 4G business expansion project. Some 13 companies picked up bid documents from TOT in February, and only six companies submitted their proposals to TOT by the deadline on March 27.
The six companies are Advanced Wireless Network, a subsidiary of Advanced Info Service (AIS); DTAC TriNet, a subsidiary of Total Access Communication; TUC RMV for 2300 MHz Consortium, a subsidiary of True Corporation; Mobile LTE; Tantawan Telecommunication; and High Media Technology.
TOT will select partners by considering what benefits they can provide, using the beauty contest model.
The source disclosed that TOT executives and its advisory company last month chose three prospective partners whose proposals were deemed suitable in terms of technical specifications, network roll-out plans, business models, return on investment and benefits packages.
TOT is negotiating the details in-depth with the three prospective partners before making a final decision later this week, submitting its choice to the TOT board for approval on May 23.
The source said TOT will give first priority to the company that commits to a clear timeline for network roll-out and commercial launch of 4G services nationwide by October 2018.
"As TOT holds the right to provide 4G service on the 2300MHz spectrum till 2025, we need to have the right partners to help us generate a new revenue stream," the source said.
TOT requires that the private partners build 1,769 4G base stations on the 2300MHz spectrum in the first year of operation, increasing to 8,455, 14,994, 20,367 and 21,217 respectively over the next four years.
The private partners will own the network they build. But they must rent the network capacity from TOT under a wholesale-resale model. TOT plans to allocate 60% of its total network capacity to private partners for rent, with 40% reserved for its own 4G operating service.
A rumour spread last week that one of TOT's three favoured partners was a newcomer to the telecom industry with an executive linked to a former key member of the National Council for Peace and Order.
The TOT source would not comment on the rumour.
Suphachai Chearavanont, executive chairman of True Corporation, said the company wants to win one of the partnership offers, even though it has the most spectrum bandwidth of any telecom firm.
Spectrum offers core infrastructure for delivering innovative digital services.
Mr Suphachai said a mutually beneficial contract would be the key factor in deciding to work with TOT on the project.
AIS chief executive Somchai Lertsutiwong said the company is eager to acquire more bandwidth from the project to maintain its leading position in the mobile market, but any deal would need a sound business analysis.