KS: DTAC teeters on 5G bid sidelines
Total Access Communication (DTAC) is at risk of losing a large chunk of high-end postpaid subscribers after the 5G spectrum licence auction on Sunday as the operator plans to bid for the 26-gigahertz range only, says Pisut Ngamvijitvong, a senior analyst with Kasikorn Securities (KS).
If the third largest mobile operator fails to deliver 5G services in the next 24 months, it is likely to lose "1 million postpaid subscribers", said Mr Pisut.
The company may have to gear up efforts to prevent an outflow of customers, he said.
DTAC lost 5 million subscribers for both prepaid and postpaid services over a period of four years while delaying 4G adoption, said Mr Pisut.
Advanced Info Service (AIS), True Move H Universal Communication (TUC), DTAC, TOT and CAT Telecom are participating in the auction.
The 700-megahertz and 2600MHz ranges will be contested by AIS, TUC and CAT. All but CAT will vie for the 26GHz range.
He said DTAC's decision to bid for only one spectrum may be an attempt to save on spectrum expenses and amortisation costs, but means losing out on competitiveness by delaying 5G adoption.
DTAC surprised the industry by choosing to forgo bidding on the 2600MHz range.
Mr Pisut said DTAC may have three options in mind. The first option is a roaming agreement with CAT on the 2600MHz range.
The second choice would see the company wait to join the 3500MHz auction for 5G service.
Lastly, DTAC may upgrade its 4G service onto the 2300MHz range under a partnership agreement with TOT for 5G service.
The first choice may not be an option if CAT fails to win a 2600MHz licence.
He said a 2600MHz cooperation deal between CAT and DTAC is likely to upset AIS and TUC.
"We do not think AIS and TUC will be happy to see DTAC piggyback on CAT's 2600MHz," Mr Pisut said.
The second option would delay the company's 5G service roll-out by at least 20-22 months, he said.
For the last option, DTAC has to seek permission from TOT, which may take 6-12 months.
Mr Pisut said KS predicts there is a high likelihood AIS and TUC will win 2600MHz licences.
KS has downgraded DTAC's core profit by 19-65% from 2020-22 as the operator may encounter an intense price war and end up without 5G services for two years, he said. The brokerage expects the 5G device adoption rate among postpaid subscribers will be 5% in 2020 and 20% in 2021.
Mr Pisut said KS expects the auction on Sunday will last 4-5 hours and 58 billion baht could be raised from all 19 licences on the 2600MHz range.
A mobile operator executive who requested anonymity said if the auction, which starts at 9.30am, runs past noon, the competition is likely to be intense and the auction will drag on into the evening.