Big trio cold to 700MHz sale

Big trio cold to 700MHz sale

Mobile operators are unlikely to participate in the 700-megahertz spectrum licence sale because the licences will be expensive and offer a meagre investment return, says Capital Nomura Securities (CNS).

The big three mobile operators -- Advanced Info Service Plc (AIS), True Move H Universal Communication Plc (TUC) and Total Access Communication Plc (DTAC) -- have never operated their services on the 700MHz spectrum, meaning new investments in antennas and transmission gear would be needed to expand their businesses, said a CNS analyst who spoke on condition of anonymity.

The 700MHz spectrum is unattractive because the licence cost is anticipated to be higher than for the same spectrum licences auctioned in other countries.

For example, in Sweden the cost is around 400 million baht per MHz, while in Thailand it is 700 million, the analyst said.

The government recently announced the use of Section 44 to ease the financial burden of the three telecom operators that won the 900MHz spectrum auction in 2015.

The move postpones the last payment term for the 900MHz licences in 2020 by an additional five years. In exchange, they must participate in the planned 700MHz licence auction scheduled for this year.

The National Broadcasting and Telecommunications Commission (NBTC) will allocate 45MHz of bandwidth on the 700MHz range, divided into three licences.

Each contains 15MHz of bandwidth priced at 25 billion baht.

Operating 5G requires a mixed use of low, medium and high spectra, therefore it's expected that mobile operators will have to invest heavily in high-spectrum bandwidth, the analyst said.

"Comparing the benefits received from the extended payment period of the 900MHz spectrum licence, which carries the cost of the 700MHz spectrum, it is expected that investment return will not be sufficient when compared with long-term risks," the analyst said.

There is a downside risk between the payment extension of the 900MHz spectrum licence and costs incurred from auctioning the 700MHz spectrum, the analyst said.

CNS expects the three mobile operators to decide at the end of May on whether to participate in the 700MHz auction.

High auction prices for the 900MHz spectrum licences made it difficult for mobile operators to manage their financial liquidity, Asia Plus Securities (ASP) said in a research note.

5G technology requires hefty investment, while business capacity remains minimal, therefore new spectrum licence auctions and investment could put pressure on operating results and the share valuation of AIS, DTAC and True, ASP said.

But the 700MHz spectrum could be a boon for digital TV operators because the NBTC plans to use capital derived from the spectrum licence auction to aid ailing digital TV operators, ASP said.

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