AIS questions value of 4G deal with TOT

Alliance not deemed worthy investment

Advanced Info Service (AIS) is considering ending negotiations on a possible alliance with its concession owner TOT Plc for fourth-generation (4G) mobile service, saying it may not worth the investment.

The review came after the state telecom enterprise recently announced it will put off signing a contract with the country's largest mobile operator to allow the company to provide 4G services on the state's existing unused frequency.

AIS chief executive Wichian Mektrakarn said the planned partnership agreement with TOT remained subject to conditions for negotiations and the settlement time-frame for the deal.

"If TOT continues to put off signing a partnership contract after April, there are no good investment reasons to tell our shareholders why AIS has to ally with TOT while the national telecoms regulator plans to auction 4G licences in August," he said.

"We would prefer to bid for a licence to provide 4G services on the 1800-megahertz spectrum, rather than enter a partnership deal with TOT," said Mr Wichian.

TOT and AIS started discussing the planned partnership last year, and initially expected to conclude the deal in January.

The state telecom enterprise wants to rent out its existing unused five megahertz of bandwidth on the 2100-MHz spectrum to AIS to provide 4G service under a network rental agreement on a one-year basis. TOT has 15 MHz of bandwidth on the 2100-MHz spectrum.

AIS agreed in principle to pay a rental cost at least 800 million to TOT that includes a minimum 36 million of monthly fee for TOT's network and some revenue sharing on the 5MHz bandwidth.

TOT last month put off signing a contract with AIS, explaining its legal and 3G business panels wanted to ensure the contract will be legal, especially regarding Section 46 of the Frequency Allocation Act of 2010, which stipulates spectra can only be allocated via an auction.

The Section also requires licence holders and spectrum owners including TOT to manage spectrum rights on their own.

Mr Wichian said he expects the National Broadcasting and Telecommunications Commission to announce a draft information memorandum for the 4G licence auction in May, while AIS needs to only focus on the auction process.

TOT president Yongyuth Wattanasin said his company would be hurt if AIS scrapped the contract, as TOT expected to gain annual revenue of at least 800 million baht from its 3G network rental service.

It has not been allowed to book concession revenue since last Dec 20. The state enterprise must now pass on concession revenue to state coffers.

AIS shares (ADVANC) closed yesterday on the SET at 226 baht, unchanged, in heavy trade worth 2.71 billion baht.

About the author

Writer: Komsan Tortermvasana
Position: Senior Business Reporter