CAT Telecom says it will cut the wholesale leasing prices it charges for high-speed wireless broadband network service by 10% this year-end to increase profit margins for its mobile virtual network operators (MVNOs).
With intense competition in the local mobile market, three major mobile operators (AIS, DTAC and True Move) are MVNOs -- companies that provided mobile service but do not own networks -- are finding it difficult to succeed.
CAT has five companies providing 3G mobile service on the state telecom enterprise's 850-megahertz network under the MVNO model. They are Real Move, a subsidiary of third-ranked TrueMove; The White Space, the operator of Penguin; SET-listed Samart I-Mobile (SIM), a subsidiary of Samart Corporation; and Data CDMA, the operator of My World 3G brand; and 168 Communication.
"The new wholesale prices are expected to be implemented by year-end," said CAT president Col Sanpachai Huvanandana.
He admitted the reduction came after a discussion with several MVNOs, particularly SIM, asking CAT to lower its rates in order to lower operating costs and increase the competitiveness of MVNOs.
Indeed, Col Sanpachai insisted its existing wholesale rates are not too high, but CAT decided to reduce rates in a drive to promote its MVNOs.
He added MVNOs face intense competition from mobile operators who have stronger brand names and financial health as well as effective distribution systems. They have targeted a highly competitive yet cash-strapped segment on the market (the young and trendy) with low average revenue per user.
An industry source, who asked not to be named, said SIM asked the National Broadcasting and Telecommunications Commission (NBTC) to return 300,000 mobile numbers, out of total 500,000, to the regulator -- citing the company could not provide services acceptable to its target customers due to its high network leasing cost.
The regulator's telecom committee approved SIM's request on November 1.
SIM currently has 200,000 active mobile users.
All mobile operators have to pay a numbering fee at one baht per month per mobile number to the NBTC. The return of 300,000 numbers can help SIM to save 3.6 million baht per year.
SIM now provides 3G wireless broadband service on the mobile network of TOT and CAT.
SIM started providing mobile service through TOT's 2100-megahertz network in 2010, while the company began providing mobile service through CAT's 850MHz network in May this year.
TOT also awarded five firms including Samart the right to resell 3G service over its high-speed packet access network.