Thaicom angling for 5G satellite cash cow

Thaicom angling for 5G satellite cash cow

Thaicom, the country's sole satellite service provider, is vying to cash in on 5G by providing broadband satellite capacity to the three major telecom operators to create a new revenue stream as the satellite business fades.

Apart from fibre and wireless broadband, the satellite network is a major infrastructure that should be critical to upcoming 5G tech, especially to offload data traffic for operators, said Patompob Suwansiri, chief commercial officer of Thaicom.

Seven digital TV channels will exit from the sector in August, but it should not have a significant effect on revenue as there are 1,000 TV channels throughout Asean renting Thaicom's transponder capacity.

Thaicom may also benefit from an expected increase in revenue from TV channels converting to satellite TV and renting its broadcasting transponder to air programmes.

Mr Patompob said the upcoming 5G technology will come with multi-access platforms that operators can use for operating and managing service through proper infrastructure that their system will optimise data usage through telecom traffic seamlessly.

"Thaicom is working with Advanced Info Service [AIS], another affiliate of parent company InTouch Holdings, to prepare for the move," he said.

However, Thaicom is open to all telecom operators.

Mr Patompob said Thaicom provides transponder capacity as a backhaul network for several mobile operators in Thailand and throughout Asia, including AIS, True Move, KDDI and Softbank in Japan and Maxis in Malaysia.

"When the 5G service commercially launched, the telecom satellite network would play a more significant role for alternative infrastructure, rather than the 4G era due to the low cost of using the satellite's network compared to fibre or wireless network," he said.

5G exceeds 4G in three major capabilities: speed, latency and number of connections.

5G is at least 10 gigabit per second (Gbps) or 10 times higher speed than 1Gbps of 4G, has better latency at 1 millisecond compared to 10 millisecond of 4G, and can accommodate 1 million connections per cell site or with 1,000 times the connection capability of 4G at 1,000 connections per cell site.

Mr Patompob said wireless networks have advantages over satellite in terms of lower latency for 5G tech.

Thaicom believes 80% of data traffic usage through applications in the 5G era would not need low latency.

"Only some platforms related to 5G services such as smart vehicles and tele-health need very low network latency, but others do not," he said.

Mr Patompob said it is too early to forecast an increase in revenue from providing network capacity serving the 5G adoption of telecom operators.

Thaicom operates three satellites under a revenue-sharing concession regime: Thaicom 4 or iPSTAR, a broadband satellite; Thaicom 5 and 6 broadcasting satellites.

The concession will expire in 2021.

Thaicom also operates Thaicom 7 and 8 under a single licence from the National Broadcasting and Telecommunications Commission (NBTC), which requires only a 5.75% licence fee payment to the NBTC.

Recently, Thaicom reported business performance for the first quarter.

Sales and service revenue was 1.3 billion baht, down 13% compared with 1.5 billion for the first quarter of 2018 due mainly to lower revenue of satellite business.

Earnings before interest, tax and depreciation was 559 million baht for the first quarter of 2019, up 22% year-on-year because of lower revenue sharing and effective cost management.

Thaicom has outlined key existing business frameworks for 2019 under three pillars: satellite business under a partnership model; expanding adjacent businesses; and exploring new businesses including AI, fintech and blockchain.

The company is on the verge of bidding for the operations rights of Thaicom 4, 5 and 6 after they expire in 2021 through the public-private partnership model.

CAT Telecom is a prospective partner for the bidding.

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