DTAC seeks high 3G return from spectra

He said that first of all, DTAC is satisfied with the outcome of the recent 2.1GHz spectrum auction, as the National Broadcasting and Telecommunications Commission (NBTC) held the auction on schedule and made the long-awaited bid a reality.
“We’re very pleased with the outcome, because the NBTC [was able to] keep the timeline – we had an auction, the NBTC announced the winners, and Thailand moved forward with the auction,” he said.
DTAC’s wholly owned subsidiary, DTAC Network (DTN) was one of the three bid winners, along with Advanced Wireless Network (AWN) of Advanced Info Service (AIS) and True Corp’s Real Future. They have all paid the watchdog the required 50 per cent of the final fee for the three spectrum slots they each acquired in the auction.
The NBTC’s telecom committee has yet to grant them the much-needed spectrum licences, despite its official approval on October 18 of the outcome of the auction. It set up a panel last week to probe alleged irregularities in the bidding in an apparent effort to stem mounting criticism of the lack of competition between the three bidders.
The probe will be finished in the next 15 days. If no irregularity is found, it will convene to consider granting the licences. Under the auction’s terms, it must grant the licences within 90 days of approving the bids.
Abdullah denied that there was any bidding collusion, saying DTAC is ready to collaborate with the watchdog in the inquiry process.
Last week, the National Anti-Corruption Commission also appointed a subcommittee to probe whether the telecom committee’s approval of the bid results breached the State Bidding Act.
Abdullah said he hoped that any legal challenge or scrutiny of the NBTC by state authorities regarding the auction’s outcome would not affect the NBTC’s licensing process for the 2.1GHz-spectrum slots.
“Right now we need to move forward. We’ve waited [for the auction] for 10 years and all our neighbours have the 3G service. The only ones that will get hurt if the process is stopped are customers,” he said, adding that people should remember that the 3G service will deliver better services and faster mobile data connectivity to consumers, along with new mobile applications.
The NBTC held the bidding for nine spectrum slots on October 16. Each slot contained 5MHz of bandwidth, at a reserve price of Bt4.5 billion. Each of the bidders was allowed to snap up a maximum of three slots. The outcome of the historic auction drew fierce criticism from many parties for allegedly letting the three major cellular firms snap up three spectrum slots each at low prices, due to a lack of meaningful competition, at major cost to the state coffers. Out of the nine slots auctioned, six went for exactly the reserve price of Bt4.5 billion each.
AWN was the top bidder, paying a total of Bt14.63 billion for the three slots, while DTN and Real Future each paid a total of Bt13.5 billion for three slots.
Abdullah declined to comment on speculation from auction observers that it was DTN that bid for only two spectrum slots in the initial phase before going for an additional one in the final phase.
But he commented that not all the spectrum slots should be regarded as having the same value. The operators might regard the first slot as a way to let them exit their concessions, while the second one is for use as service capacity. The third slot might not be used for capacity reasons until some future time. Operators had to think carefully about whether they wanted to spend an additional Bt4.5 billion on the third slot now, or wait for other spectra to come to auction in the future.
He said he believed that the NBTC set the spectrum reserve price at the right level. If the reserve price was higher, he said, some operators might not have bid for a third slot.

RAPID ROLLOUT
For the 3G development and network rollout, DTAC set aside Bt40 billion during the first three years of development. Its savings from the auction will allow it to put additional investment into the 3G-2.1GHz network rollout plan. This will enable it to roll out the network faster than required under the auction’s terms.
The company now plans to complete the network roll out to cover 50 per cent of the population within one year – versus the auction terms’ requirements of two years – and will cover 80 per cent of the population within three years, versus the required four years.
With the upcoming additional 15MHz bandwidth on the 2.1GHz spectrum from the auction, coupled with its existing 10MHz on the 850MHz spectrum, Abdullah said DTAC customers would get great quality broadband cellular service from this huge spectrum bandwidth.
When asked if DTAC aims to be No 1 in the 3G-2.1GHz market, or had set a customer target number, Abdullah said, “I’m not really worried about a number. I’m not chasing the number. It’s more about the quality; that people who will use our 2.1GHz network will see that we’ve a better network than the others.
“To be the No 1, just to be clear, is not about having most customers or making most money. The data usage growth is the key. We want to be the fastest-growing data company in the country,” he said. By that he means DTAC would keep growing the contribution of mobile-data-service revenue to its total service revenue at a faster pace.
For the past nine months, its non-voice revenue stood at Bt10.74 billion, of which Bt6.34 billion was mobile-data-service revenue. During the first nine months of last year, its non-voice revenue was Bt7.27 billion, of which Bt3.38 billion was from mobile-data-service revenue. The non-voice revenue accounted for 24.3 per cent of total service revenue in the third quarter this year, versus 17.4 per cent of total service revenue over the same period last year.
DTAC will deploy its 3G-850MHz network to support its planned 2.1GHz network. During the peak usage of the 2.1GHz service, it will unload traffic to the 3G-850MHz network in order to maintain 2.1GHz service quality during the peak hours.

TRUE EXPECTATIONS
Its rival Real Future will also leverage the 3G-850MHz network of its subsidiary BFKT (Thailand) to support its 3G-2.1GHz network build-up and provide roaming to prospective 2.1GHz subscribers. True Corp recently said it expects to break even on its upcoming 3G-2.1GHz service within five or six years. It plans to rename Real Future as True Future and has also considered restructuring its business group to prepare for the launch of the 3G-2.1GHz service. It might also seek foreign partnership to enable it to procure 3G mobile devices and a network on a cost-effective basis. True’s Real Move currently has around 3 million 3G-850MHz subscribers.
At the end of the third quarter, DTAC, which has Norway’s Telenor as strategic partner, had about 3,500 3G-850MHz sites in Bangkok and 42 other provinces. It maintains the target of completing a total of 5,000 3G-850MHz sites nationwide by the end of 2012.
AIS, which has yet to announce third-quarter operating results, continued to expand its 3G-900MHz footprint and capacity in the second quarter with 3,500 base stations in 17 key strategic cities to serve rising demand for mobile data connectivity.
DTAC’s CEO said DTN is not in a hurry to launch the 2.1GHz service, and wants to make sure that it can provide the highest data-connectivity speed and best quality service. He declined to talk about strategic marketing and branding for the service.
In the initial phase, the three bid winners are expected to focus on migrating their parents’ premium mobile-data customers from the state concessions to the planned 2.1GHz networks.
DTAC is estimated to have about three million customers, who have mobile devices compatible with 3G service on both 850MHz and 2.1GHz spectra. They are the primary group it will migrate to the planned 2.1GHz network.
Abdullah added that DTAC is well equipped to provide the 2.1GHz service. The company moved into the 3G-850MHz service a year ago with competitive data packages.
It also upgraded its customer service shops, while its replacement of the existing 1,800MHz network nationwide with the new one – what it calls the “network swap” – is more than 70-per-cent complete. All these elements have paid off to support its 2.1GHz service launch.
Now, the social pressure is on the NBTC to squeeze the three bid winners to offer low 3G service fees, given they won the prized spectrum at what is seen by many as a too-low price. The telecom committee also plans to attach to the licences a low-fee requirement. Abdullah said he truly believes that competition among the three bid winners would be the “most efficient way” to address the issue.