The telecom sector in 2018 is expected to continue revenue growth of 2% more than GDP growth, in line with growing data consumption from users communicating via multimedia services, especially through over-the-top (OTT) platforms.
Increasing consumer use of innovative services and behaviour changes from such usage is expected to keep revenue growth steady in the sector.
Pisut Ngamvijitvong, an analyst from CIMB Thai (CIMBT), predicts the big three operators will remain concerned over their respective declines in return on investment (ROI) because of the high 4G licence bids in 2015.
This will make cost reductions a much more important strategy than the competition over customers that has persisted for the last two years.
"Smartphones will be more affordable this year and users will consume much more data [than before]," he said.
Somchai Lertsutiwong, chief executive of Advanced Info Service (AIS), said the mobile penetration rate is more than 130% of the population and will continue growing in line with connectivity demands through devices, especially the Internet of Things (IoT).
Mr Somchai said data services consume more than 60% of total traffic and will be a major factor driving higher average revenue per unit for operators.
The number of postpaid subscribers will continue to increase as more users tend to consume data services via unlimited broadband internet promotions through postpaid plans.
"Traditional telecom services via data, multimedia and voice will be major drivers for the telecom sector in 2018. Although increasing numbers of people are using OTT, especially on-demand video, the proportion is still insignificant," he said.
All operators provide a variety of digital services both for businesses and consumers via innovative platforms, but the use of these services has yet to be broadly adopted, said Mr Somchai.
New revenue streams from innovative services will still be able to generate significant benefits in 2018, he said.
"AIS expects to see revenue grow 2% higher than the GDP of the country, in line with the overall telecom sector," said Mr Somchai.
Kittinut Tikawan, newly appointed co-president for commercial operations at True Corporation, reinforced the consensus that the overall telecommunications market in Thailand is expected to experience continuous growth, while operators will maintain their efforts to attract new subscribers as well as keep their existing customer base.
"The overall telecom market in the country will grow between 3-5%."
Mr Kittinut said True Move, a mobile business arm of True Corp, is the second-largest operator in terms of market share.
True believes prepaid customers will turn to postpaid mobile services in 2018 because of their growing appetite for mobile internet.
As smartphones become more affordable, more content marketing will be launched by operators, offering more incentives and privileges.
In addition, consumers will be offered more convergence marketing activities on digital platforms as well as integrated mobile content, mobile commerce and mobile payment, which will create product differentiation and better respond to customer demand in the digital age.
New chapter for IoT
IoT implementation will be more concrete in 2018 in both business and consumer segments, along with the use of big data analytics in business operations.
A significant step in IoT development in the country took place after the telecom regulator approved the final draft of utilisation on the 920-925 megahertz band for IoT services in November last year.
The move was aimed at initiating a spectrum standard for machine-to-machine connectivity that responds to the application of new technologies, the increasing utilisation of IoT devices and improving the efficacy in every sector of the country.
IMC Institute predicts IoT services will be as crucial to the daily lives of Thais as they are intrinsic to the government's smart city projects.
Takorn Tantasith, secretary-general of National Broadcasting and Telecommunications Commission (NBTC), said the telecom sector will continue to grow in 2018 in line with the increasing demands of data consumption.
New SIM subscriptions amount to 4.1 million numbers per month for the overall market.
"Telecom operators will have to manage their network capacities to serve increasing use of data services in the long run," Mr Takorn said.
The NBTC believes 2018 see the initial steps of IoT development for the mass market.
According to a Frost & Sullivan study, the IoT ecosystem will generate some 34 billion baht within the economy.
Year of cooperation
Mr Somchai said cost reduction management is a critical mission for mobile operators as ROI for telecoms has been declining, mainly because of the expense from 4G licences as well as technological development.
"Apart from seeking and contributing to new revenue streams, telecom operators will try to reduce operation costs in a drive to ensure healthy profit margins," he said.
Previously, Mr Somchai said AIS will spend only 24 billion baht for its network expansion budget in 2018, only 60% of the 40-billion-baht annual budget over the past three years.
AIS's network capacity covers 98% of the population in Thailand, both on 3G and 4G wireless broadband networks.
The 2018 budget will mainly boost capacity density in areas where data service is needed.
Mr Pisut said the telecom sector has suffered from declining ROI since the 2015 auction of 4G licences. The decline is reflected in foreign investment for telecom shares on the Stock Exchange of Thailand (SET).
He said the winning bids of 4G licence auctions in 2015 were too high, especially for the 900MHz spectrum.
"Prior to 2015, foreign investors held 30% of AIS, but the portion declined to only 17% after the auction and recently increased slightly to 20%," said Mr Pisut.
AIS won the 900MHz licence for 75.65 billion baht while True Move won another licence for 76.29 billion.
The companies have paid for two terms -- 8.04 billion baht each in 2016 and 4.02 billion baht each in 2017.
In 2018, AIS and True Move each must pay the third licence payment at 4.02 billion baht.
In 2019, AIS and True Move will have to pay 59.5 billion and 60.2 billion baht, respectively. But they requested a delay until 2023, with interest payments, and the NBTC approved that request in late December.
Mr Pisut said foreign investors are also concerned about uncertainty surrounding the next auction in 2018.
"The SET soared beyond 1,700 points for months and most major stocks saw new price highs, while telecom stocks have only seen small increases," he said.
The NBTC plans to auction one licence for 10MHz (upload and download) on the 850MHz spectrum, and three licences on the 1800MHz spectrum (each containing 30MHz of bandwidth for upload and download).
The reserve price for the 850MHz licence is 37.9 billion while each 1800MHz licence is set at 37.4 billion baht.
The 1800 and 850MHz spectrum ranges are operated by Total Access Communication (DTAC) under a concession from state-owned enterprise CAT Telecom that will expire on Sept 30, 2019.
Operators and investors consider the reserve prices of the next auction to be too high as they are based on the 2015 auction's winning prices.
The existing NBTC has no authority to hold the auction because its six-year working term expired in October 2017. The acting NBTC prepared the design draft for the next auction.
It is difficult to predict when the government will finish recruitment for the new NBTC, making it uncertain whether the auction will be held before DTAC's concession expires in September.
CIMBT believes the 2015 spectrum auctions for 1800MHz and 900MHz depressed industry sentiment.
Telecom operators need to double their spectrum holdings in preparation for 5G technology, said CIMBT.
Competition between the telecom firms is expected to be much more cooperative as the company heads prefer to discuss moving the market forward to optimise their benefits.
CIMBT expects a positive trend for the mobile industry from 2017-2019. Price cuts are no longer effective and there will be more collaboration in pricing.