True Corporation and Jasmine International will pay 151.95 billion baht for licences to provide fourth-generation wireless services in Thailand after outbidding larger rivals Advanced Info Service and Total Access Communication (DTAC) in an auction that ran for almost four days.
True, 18% owned by China Mobile and controlled by billionaire Dhanin Chearavanont's Charoen Pokphand Group, topped the bidding for the 900MHz spectrum with 76.3 billion baht, while Jasmine's bid was valued at 75.67 billion baht.
Jasmine's victory will pave the way for its first foray into mobile internet. The company currently provides broadband services under the 3BB brand.
The four-day auction, which ended in the 199th round early on Saturday, will bring in 151.95 billion baht in state revenue, bringing the total from mobile spectrum bids this year to 232.73 billion.
After the bidding process, which took 65 hours, the bids were nearly six times higher than the value of the spectrum and almost double the winning bids in the previous auction, the National Broadcasting and Telecommunications Commission (NBTC) said.
Total Access Communication (DTAC) had the most to lose, because AIS and True won licences to offer 4G services on the 1,800MHz spectrum at a similar auction last month.
The result may surprise investors who expected Advanced Info Service (AIS) and DTAC to leverage their stronger balance sheets to accelerate their 4G network expansion and grab a larger share of the market for mobile data in Thailand, which had about 86 million mobile-phone subscribers as of September.
TAC shares slumped 16% this week as investors worried that the high bid costs, if it won the auction, could erode earnings. The SET ICT index is down 21% in the past three months, compared with a 6% fall for the broader SET Index. TAC has been the top loser, sliding 35%, while True declined 27%. AIS stock has shed 15% and Jasmine 17% over the three-month period.
Faster networks
DTAC has three years before its current licence expires, NBTC commissioner Prawit Leesatapornwongsa told reporters early on Saturday.
“It has to work on marketing strategies, and seek new frequency, and it can bid when its licence expires in 2018,” Mr Prawit said.
- Earlier report: Jasmine, True grab 4G licences
Customers will start moving to the new faster networks in February, and the number of 4G subscribers will reach 20 million by the end of next year, according to the NBTC.
The auction was also a windfall for the government, which has pledged to use the 234 billion baht raised in recent months to help farmers cope with dry weather and slumping crop prices.
Companies began offering 3G services in mid-2013 after eight years of delays caused by legal battles and regulatory wrangling. In 2012, the NBTC raised 41.6 billion baht in an auction for licences of third-generation cellular services. AIS, DTAC and True won those licences. DTAC and True had already started offering services at speeds approaching 4G using existing spectrum.
“It will help drive Thailand toward the digital economy,” Minister of Information and Communication Technology Uttama Savanayana told reporters on Friday. “Proceeds from the auction will also benefit all sectors in Thailand.”
The country's mobile market is dominated by the top three players — AIS, DTAC and True Move, a unit of True Corp — and analysts expect competition will intensify now that Jasmine has won a licence to become the fourth operator.
Analysts said the high level of the bids could put pressure on the financial positions of True and Jasmine, which could increase the risk of an equity issue to raise finds to help pay for the world's most expensive licences.
True shares closed on Friday at 7.25 baht, down 10 satang, in trade worth 763.28 million baht while Jasmine shares (JAS) closed unchanged at 4.78 baht in trade worth 1.61 billion baht.
AIS shares (ADVANC) closed down 6 baht to 193 baht in trade worth 2.72 billion while DTAC shares closed down 4.25 baht to 38 baht in trade worth 774.8 million baht.
AIS, 23% owned by Singapore Telecommunications Ltd, and True won bids worth combined 80.78 billion baht in November's auction.
AIS, which has the largest subscriber base, needs a new licence to expand coverage after it lags behind rivals on 4G services, while DTAC wants a licence to reduce its costs and to stop True from gaining market share.