900-MHz bid phase to remain 20 minutes

900-MHz bid phase to remain 20 minutes

Auctions may end at earlier time of night

The bidding phase of each round for the auction of two licences on the 900-megahertz spectrum in mid-December will remain at 20 minutes, the same as in last week's marathon 1800-MHz auctions.

Some members of the National Broadcasting and Telecommunications Commission (NBTC) had floated the idea of cutting the bidding time to 10 minutes in the wake of the unprecedented 30-hour auctions.

But the NBTC's telecom committee rejected the idea yesterday, saying it would require changes to the auction draft already published in the Royal Gazette.

"If we change details of the existing auction draft, we [the NBTC] must hold a new round of public hearings on the issue," said Col Settapong Malisuwan, chairman of the telecom committee.

"This could result in a delay of the planned 900-MHz spectrum auctions, scheduled for Dec 15."

Advanced Info Service Plc (AIS) and True Corporation won the two licences of 1800-MHz spectrum after 86 rounds in 30 hours of bidding over two days, with offers rising to a combined 80.9 billion baht.

"The [1800-MHz] auctions gave us a lesson that can be inserted into the following auctions," Col Settapong said.

The NBTC is considering setting the end time for next month's 900-MHz auctions at 8pm compared with 10pm for the 1800-MHz auctions.

If the 900-MHz bidding does not end by 8pm, the auction would resume at 10am the next day.

After the bidding time, all representatives of the four bidders could be separately transferred to a hotel to rest.

The NBTC may reserve four floors of a hotel for the bidders, with restrictions on electronic communication.

Fitch Ratings said the final prices for Thailand's 1800-MHz spectrum auctions were significantly higher than expected.

If the competition in next month's 900-MHz spectrum auction is equally intense and AIS acquires spectrum at a significantly higher price than expected, Fitch may consider a negative rating action should the company's adjusted net leverage for fund flows from operations (FFO) rise above 1.5.

Fitch Ratings has affirmed AIS's long-term foreign- and local-currency issuer default ratings at BBB+ with a stable outlook.

The agency has also affirmed its national long-term rating of AA+(tha) with a stable outlook and national short-term rating of F1+(tha).

Fitch said the high upfront spectrum fee and sustained high capital expenditure for network expansion would raise net debt for most telecoms.

Thus, their financial leverage is likely to deteriorate over the next two years, the rating service said.

Free cash flow will be negative for these operators, which are likely to maintain high dividend payouts.

Fitch estimates AIS's FFO-adjusted net leverage will rise over the next two years with the company's additional investment in 1.8-gigahertz spectrum.

As of Sept 30, the FFO-adjusted net leverage for AIS, Thailand's largest mobile phone operator by revenue, remained low at 0.8.

The stiff competition of the 1800-MHz auctions suggests the 900-MHz bidding could be equally intense.

Operators, particularly the two that did not win an 1800-MHz spectrum, are likely to compete aggressively to secure the spectrum, which will be crucial to remaining competitive in an environment where data is increasingly important to drive revenue growth.

A report conducted by the GSM Association predicts the number of 4G subscribers worldwide will reach 700 million this year and top 1.2 billion next year.

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