Total Access Communication (DTAC) is shrugging off criticism of its Line Mobile service, saying all of the service's revenue will be channelled to the company and subject to the same regulatory fees as revenue from its traditional services.
"We can provide service through Line Mobile without an additional mobile or a mobile virtual network operator [MVNO] licence because it is merely a marketing scheme," said chief executive Lars Norling.
"The deal does not create a separate corporate entity or entitle Line Thailand to any part of the revenue generated by the service," he said.
Line Mobile is simply a scheme that allows DTAC to use the Line brand and Line technology to attract digitally focused consumers, Mr Norling said.
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Advanced Info Service (AIS) chief executive Somchai Lertsutiwong last Wednesday said Line Mobile is "very much like an MVNO" and would require a licence. An MVNO is a mobile operator that operates without its own telecom network but leases other network capacity to provide mobile service.
But Mr Norling's view is that Line Mobile is part of DTAC Trinet (DTN) (a subsidiary of DTAC), which already operates a licensed telecom network.
Mr Norling declined to disclose further details of the relationship between Line Thailand and DTAC, but he said he would clarify the issue on Thursday, after its meeting with the National Broadcasting and Telecommunications Commission.
Last week, DTAC's competitors AIS and True Move filed complaints asking the regulator to clarify whether Line Mobile can operate without a licence. Uncertainty over licensing requirements may raise competitive and fairness concerns.
Competitors may worry that Line Mobile can provide lower-cost services because it doesn't have to shoulder the extra cost of a licensing fee. The concern on the government's side is that the state may not benefit as much as it should, because "the collaboration will earn significant revenue, but they won't pay a licensing fee", a source at a major mobile operator said yesterday.
But Mr Norling said "all revenue will be channelled to DTN and subject to the relevant government fees", just like revenue generated by the operator's traditional offerings.
If the service is deemed legal, sources in the telecom industry have said the practice would probably extend through the whole industry and hit the state's bottom line. Indeed, Mr Norling intimated that the contract was not exclusive, which suggests that Line can partner with AIS and True Move to provide similar services.
Line Mobile is close to 18% cheaper than DTAC's traditional service, based on the brand's most expensive postpaid package. Asked how the company is able to provide lower prices despite regulatory expenses, Mr Norling said Line Mobile derives savings from its more efficient operating structure.
"Its experimental," he said.
Line Mobile lowers online and streaming costs for some users, and provides easy top-up. (Photos provided)
The company declined to quantify its expectations for the service ahead of its third-quarter financial report. The service, which was launched on Sept 17 and had a three-month trial period before that, currently has 10,000 users, Mr Norling said.
He said the company will still offer pricier, more traditional services alongside Line Mobile in order to capture the consumer segment that is not yet ready to go fully digital.
"We cannot move too quickly," he said.
Line Mobile service is being positioned as a fully digital alternative. Customers can pay their bills, toggle between "free normal" and fast data, and contact customer service online through the mobile application.
Line Mobile, which markets itself as a low-risk, no-contract alternative, may be DTAC's best bet to win back terrain in the prepaid segment.
DTAC slipped to become the third-largest mobile operator in the country at the beginning of the year. The company lost 1.3 million customers between the second quarter of 2016 and the equivalent quarter of this year. The firm's addition of 765,000 postpaid consumers was far outweighed by its loss of 2 million prepaid customers (some of whom may have migrated to its postpaid segment).
Mr Norling said there is a general trend in the industry towards postpaid packages, which is the segment DTAC is focused on. Prepaid consumers, however, are still by far the most important sector in terms of consumer numbers.
Prepaid customers still represent 77% of the company's clients but bring, on average, only 27% of the revenue that postpaid users do. The two segments have similar margins, said Mr Norling, if subsidies (which are now the market norm) are taken out of the equation.
According to the company's second-quarter report, "revenue growth was driven by the postpaid segment, while the prepaid segment remains challenging due to subsidised handsets being available in the market and the churn [rate] of low quality subscribers".