Big three get help from Section 44

Big three get help from Section 44

Action defers final 900MHz payment

After a year of deliberation, the government plans to announce the use of Section 44 on Thursday to ease the financial burden of the three telecom operators that won the 900-megahertz spectrum auction in 2015.

The government action grants an extension on the last term of payment for the 900MHz licences due in 2020, adding another five-year instalment period. In exchange, the winning bidders must participate in the planned 700MHz licence auction scheduled for this year.

The move comes despite some academics publicly opposing the plan, saying assistance to major operators is at the expense of the state.

Academics also said the planned 700MHz auction was too rushed considering Thailand has yet to develop real business use cases related to 5G adoption.

But the National Broadcasting and Telecommunications Commission (NBTC) and some analysts strongly supported the assistance, noting that the three major mobile operators have enormous financial burdens from buying 3G and 4G licences at previous auctions worth a combined of 270 billion baht.

A source close to the government said the procedure for invoking Section 44 would be officially published in the Royal Gazette either on Thursday or Friday.

The move is a critical component of promoting 5G adoption in the country, in line with the government's policy.

Money from the 700MHz auction is partly meant to subsidise the operating costs of digital TV operators under a long-term survival plan.

WIN FOR TELECOMS

Advanced Info Service (AIS) and True Move H Universal Communication (TUC) were required to pay the last term for 900MHz licences in 2020, a sum of 60 billion baht, to the NBTC. Section 44 relief postpones their payment time frame.

Meanwhile, Total Access Communication (DTAC) through its subsidiary DTAC Trinet must pay the last term of its 900MHz licence in 2021, a sum of 30 billion baht. DTAC Trinet won the 900MHz licence in the auction last year, comprising just 5MHz of spectrum bandwidth.

NBTC secretary-general Takorn Tantasith declined to give details of the decision.

"The NBTC was not the major party pushing for Section 44," he said. "It was the winners of the 900MHz licences that submitted their requests to the government over the past year."

AIS and TUC jointly asked the government in late 2017 to invoke Section 44. The two companies said they needed assistance from the government to ease their financial burden, the same basis for demands made by existing terrestrial digital TV operators.

The winning prices of the 900MHz licence auction in 2015 were the highest winning prices in all Asia and the second highest in the world, trailing only the US based on income per capita in each country.

The high winning prices (151 billion baht) were mainly driven by bids by JAS Mobile Broadband, which won one slot and failed to make the first licence payment in March 2016. JAS had its 645-million-baht deposit guarantee confiscated and paid only 200 million baht to the NBTC.

The NBTC board agreed with the requirement of AIS and TUC to extend payments for another five years from 2020 to 2025 in instalments.

DTAC also asked for assistance from the government on the same basis after the company won the 900MHz licence last year.

ABUSE OF POWER?

Somkiat Tangkitvanich, president of the Thailand Development and Research Institute, previously opposed using Section 44.

Mr Somkiat said the planned 700MHz auction is being rushed despite 5G still lacking any business case uses.

He said the NBTC should take three steps to ensure efficiency in preparing for 5G adoption: develop a spectrum roadmap for 5G, including standards and reserve prices for low-middle-high band ranges; create stable regulatory conditions to help reduce costs for operators and prevent unfair competition; and promote real infrastructure-sharing in the industry.

Mr Somkiat also disagrees with the NBTC's plan to use some of the money from the 700MHz auction to subsidise the operating costs of digital TV operators.

The government via the NBTC has given assistance to digital TV operators since 2017.

RETURN ON INVESTMENT

An analyst from Kasikorn Securities who requested anonymity said he agrees with the government's extension of the 900MHz licence payment because now is a critical time to prepare for 5G adoption.

Telecom firms have faced declining returns on investment capital since 2016, due to the financial burden of annual infrastructure investment and the cost of spectrum licence payments.


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