TOT Plc has finally selected Total Access Communication (DTAC) as its partner for 4G services on the state telecom's 2300-megahertz spectrum, after almost six months of intense competitive bidding among the major three mobile operators.
The TOT board approved the country's second-largest mobile operator becoming a partner on Tuesday, said a director from the board who asked not to be named.
DTAC, through its subsidiary DTAC TriNet, was one of six private mobile companies to submit their partnership proposals to jointly provide 4G wireless broadband service on TOT's network.
The other five are Advanced Wireless Network, a subsidiary of AIS; TUC RMV for 2300 MHz Consortium, a subsidiary of True Corporation; Mobile LTE; Tantawan Telecommunication; and High Media Technology.
"DTAC provided the most attractive proposal to us through the beauty contest model," the director said.
The source also said AIS, DTAC and True Move were the 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.
"DTAC was chosen because the company committed to installing the highest number of 4G base stations nationwide, doubling its rivals' offerings," the source said. "The company also provided the highest annual fixed payment to TOT."
The source also said that DTAC is under heavy pressure because the company will have the least spectrum bandwidth once its concession expires.
Therefore, the company has been forced to exert the greatest amount of effort to secure new bandwidth to provide service efficiently, the source said.
DTAC's two rivals, AIS and True, had only wanted to use TOT's 2300MHz spectrum for roaming on their existing networks of other spectrum ranges.
An industry veteran said DTAC would be relieved now that the company could secure an additional 30MHz of bandwidth on TOT's 2300MHz spectrum, as the company's major 2G mobile concession contract with CAT Telecom is due to expire in September 2018.
DTAC holds 45MHz of bandwidth on the 1800MHz spectrum, plus another 10MHz of bandwidth on the 850MHz band. Both are under a concession contract with CAT Telecom, which is due to expire in September 2018.
But under the concession, DTAC must use 25MHz of bandwidth on the 1800MHz spectrum at full capacity before having access to the remaining portion.
DTAC also holds another 15MHz of bandwidth on the 2100MHz spectrum under a licensing agreement.
DTAC failed to win a 4G license during the 1800MHz and 900MHz spectrum auctions in 2015, while its rivals AIS and True Move both secured licences for each spectrum.
DTAC chief executive Lars Norling said the company received a letter from TOT yesterday allowing DTAC TriNet to enter into the contracting process for the provision of wireless service on the 2300MHz band.
As part of the proposal, DTAC TriNet has offered TOT an annual fixed payment of 4.51 billion baht under certain conditions throughout the terms of the contract until 2025.
Mr Lars said Thai consumers will get greater benefits from this business collaboration in providing wireless broadband connectivity with quality services, along both high and growing demand for mobile data services.
In a company statement, Sigve Brekke, chief executive of Telenor Group, said the partnership provides clarity on its spectrum position in Thailand.
Access to significant spectrum resources, both the 2100MHz and the 2300MHz frequency bands, will make the company well-positioned to continue to serve its Thai customers with quality services, he said.
TOT holds 60MHz of spectrum on the 2300MHz frequency band until 2025.
According to the partnership proposal, Mr Brekke said DTAC will build a network based on this spectrum and have the right to utilise up to 60% of the capacity in it for a fixed annual fee of 4.5 billion baht.
He said TOT and DTAC aim to sign a final agreement in the fourth quarter of 2017. Prior to this, they will conclude negotiations on term and conditions and secure approval with relevant state agencies.
TOT had required that the partner build 1,769 4G base stations on the 2300MHz network in the first year of operations, increasing to 8,455, 14,994, 20,367 and 21,217, respectively, over the next four years.
The partner will subsequently 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.