NBTC telecom panel insists spectrum auction carried out strictly in accordance with law

Committee members made the remark at the Central Administrative Court, before being questioned by the court following a petition by the Ombudsman last week for it to rule on whether the auction had lacked free and fair competition.

The Ombudsman also sought an injunction to suspend the NBTC’s plan to grant licences to the three bid winners at the October 16 auction.

NBTC chairman Thares Punsri, telecom committee chairman Settapong Malisuwan and committee member Suthiphon Thaveechaiyagarn attended the court.

Thares said the aim of the auction was to usher the country into the advanced mobile-phone technology era, while Settapong said the auction process had been developed in accordance with relevant law and regulations.

The court had called the Ombudsman in for questioning on Wednesday following last week’s petition.

The telecom industry is anxiously waiting to see whether the NBTC’s planned granting of 2.1GHz spectrum licences to the bid winners will be disrupted by any legal order.

Under the auction terms, the agency has to grant the licences within 90 days of approving the bidding outcome. The telecom panel endorsed the bid winners on October 18.

Southeast Asian outlook

In a separate matter, Fitch Ratings said in a new report, "2013 Outlook: Southeast Asia Telecommunications –

Capable of Meeting Capex, Margin Challenges", that regional telecom companies are likely to face margin pressures next year as competition intensifies.

Fitch said its positive outlook on the Thai telecom sector is based on its expectation that the operators will be less exposed to policy and regulatory risks following the issuance of 3G licences.

Technology upgrades to 3G should also support the growth in non-voice revenue, given an improvement in data network quality. Credit metrics may deteriorate due to high capital expenditure and licence fees, but the two largest mobile operators should have sufficient headroom in their ratings, the report said.

In Indonesia, Fitch expects the dominant top-four operators will generate adequate cash flow from operations to support continued high capital expenditure (capex). Smaller telecom firms will continue to struggle amid declining tariffs, low profitability and weak balance sheets.

In Malaysia, most telecom companies will maintain their operating ebitda (earnings before interest, tax, depreciation, amortisation and restructuring) margins due to stable voice tariffs and rising data revenue. Wireless operators’ free-cash-flow margins will remain robust as capex will stay relatively low.

Telekom Malaysia’s capex peaked this year as it completed the majority of its high-speed broadband network (HSBB) expansion. Competition in data could intensify with the launch of 4G and the entry of resellers into the market, retailing capacity leased from the company’s HSBB, said Fitch.

In the Philippines, Fitch expects price competition will lead to continued margin erosion next year, despite the duopoly market.

Volume growth in the country is likely to be insufficient to offset margin decline, and therefore Fitch expects the operators’ cash flow from operations to be weaker. However, leverage will improve as free cash flow is likely to turn positive due to lower capex – with the completion of major network investments this year.

All three Singapore telecom operators are likely to face pressure on operating ebitda margins due to continuing smart-phone subsidies and pay-TV content costs, despite better data monetisation prospects. Nevertheless, solid free-cash-flow generation and relatively low capex/revenue should maintain credit profiles.

"Demand growth is likely to match or outpace the decline in margins and growth in investment and credit metrics will generally be stable or slightly improved," said Steve Durose, head of Fitch's Telecommunications, Media and Technology team in Asia-Pacific. "In the cases where credit metrics will decline, Fitch expects few rating downgrades as these operators generally have significant headroom at their current rating level."