All is fair in love and 4G licences bidding war

The watchdog kicked off the auction at its head office on Paholyothin Soi 8 at 10am on Wednesday. Instead of ending at 9pm on Wednesday like it was supposed to, the bidding dragged on about 33 hours until Thursday evening.

The four bidders, comprising 35 representatives, had to draw lots for bidding rooms, which the NBTC named after Thai flowers.

 

The Ratchaprueck Room was assigned to Advanced Wireless Network (AWN) of Advanced Info Service (AIS)

AIS sent 10 representatives, led by chairman Vithit Leenutaphong and vice chairman Somprasong Boonyachai. It kept pursuing the second spectrum block from the start, as it is adjacent to the 1800MHz band being used by Total Access Communication.

AIS reportedly kept raising the price of the second block as if to warn rivals that it was pursuing this block, though sometimes it switched to bidding for the first block when the price of the first block was far lower than the second block. 

The company did not exercise its right to pass a round throughout the bidding. And in the eighty-fifth round, when no one raised the bid against it for the second block, it still raised the price of the second block.

And it won the second block by quoting Bt40.99 billion.

According to Somchai Lertsutiwong, chief executive officer of AIS, the bidding exhausted him and he felt like he was being kept in a prison for 33 hours, as communications with the outside world were prohibited. He also did not expect that the bidding would last this long.

It is difficult to say if AIS paid too high a price for the licence, he said. But one thing he could say was that it made him happy that AIS helped generate special revenue for the state’s coffers.

 

The Chompupantip Room was assigned to Jas Mobile Broadband of Jasmine International (JAS)

The number of Jas Mobile representatives – five – belied the company’s intention to win a licence. Despite its failure to clinch one, JAS made a name for itself as the catalyst of the competition, given its aggressive pursuit of a licence. Its final offer was Bt38 billion. JAS reportedly bid for both spectrum blocks alternatively.

A telecom analyst said that once the bidding approached JAS’ Bt39 billion market capitalisation, he did not rule out the possibility that JAS had a deep-pocket strategic partner to co-invest in the mobile phone business. 

If his theory is right, the three incumbents – AIS, True and DTAC – not only bid for the spectrum, but also tried to prevent JAS from entering the mobile phone service market.

The industry observer said JAS is eager to enter the wireless broadband market to expand its flagship fixed broadband Internet business. However, the bidding this time showed that it might be difficult for a new player to enter the market via an auction, since it would have to fight with three cashed-up rivals.

After the auction, instead of rushing back home, Pete Bhodaramik, CEO of JAS, was seen meeting with his team at the NBTC for half an hour to review what they learned from the bidding. And most industrialists believe that with JAS as one of the same four qualified bidders for the auction for two 900MHz licences next month, the competition will be just as gruelling as the 1800MHz auction.

 

The Kasalong Room was assigned to DTAC TriNet of Total Access Communication (DTAC)

DTAC TriNet’s bid raised industrialists’ eyebrows. Its final offer was only Bt17.50 billion, not far from the starting price of Bt15.91 billion.

Like AIS, DTAC sent in 10 representatives led by CEO Lars Norling. It reportedly started the bidding for the second block before raising the price a few times. Then it used up all three passes in a row and dropped out in the sixth round.

Some industrialists viewed that DTAC might not have been a serious bidder, since it already has 25MHz of 1800MHz under its concession from CAT Telecom. It has already allocated 10MHz of that band to provide its 4G service. The company would be much more serious in pitching for a 900MHz licence.

However, other industrialists argued that offering 4G under the concession means the service is subject to 30-per-cent revenue-sharing with CAT, according to the concession terms. And when the concession expires in 2018, it has to hand over the 25MHz of 1800MHz back to CAT.

Following its low quote, some industrialists wondered if DTAC’s parent, Norway’s Telenor, still wants to be a long-term investor in Thailand.

Given its quick end to bidding, DTAC executives took a break in the afternoon of Wednesday. At 3am Thursday, four representatives left the bidding room to go home with the NBTC’s permission, and the other two followed on Thursday.

On Friday, DTAC released a statement confirming that it would continue rolling out the 4G service, despite failing to win a 1800 MHz licence. Norling said DTAC is highly confident that all of the frequencies that DTAC is operating on in the 2100MHz, 1800MHz and 850MHz bands are sufficient to maintain quality and provide coverage of voice and Internet services for 4G, 3G and 2G.

Last Friday, Norling reportedly assured the company’s employees that they had nothing to worry about regarding the 1800MHz bid outcome and DTAC would become the leader in a few years.

 

The Supannikar Room was assigned to True Move H Universal Communication of True Corp

Like AIS, True reportedly did not exercise its right to pass. The company kept bidding for the first block from the very start.

After DTAC stopped bidding, it appeared that True was battling with JAS for the first block.

Its clinching of the first block for Bt39.79 billion proved its determination to become the market leader and silenced criticism that the company did not want the auction to take place in order to preserve its edge in the mobile data service market against AIS and DTAC. 

And after it emerged as one of the bid winners, True CEO Suphachai Chearavanont could not help beaming. The other thing making him smile was his wife’s face when she came to pick him up at the NBTC after the auction.

Winning the 1800MHz licence also lets True continue taking care of customers of its subsidiary TrueMove, who have yet to migrate to another network. These two bands of 1800MHz the watchdog put up for auction used to belong to TrueMove and AIS subsidiary Digital Phone Co.

Due to the complaints of bidders over the inconvenience they suffered during the 1800MHz auction, an NBTC source said that for the upcoming 900MHz auction, the watchdog might transport the bidders to hotels for overnight stays if the bidding does not stop at the intended time of 9pm.

However, the watchdog will have to disconnect cellular signals for their floors to prevent a possible conspiracy. The NBTC has learned a lesson from this auction – that it should be better prepared for the unexpected, including continuing beyond the schedule.

Some executives said they felt like being confined in a prison due to the tightly sealed rooms with tinted windows. 

After hours of marathon bidding, many executives felt fatigued and experienced high blood pressure. On the second day some even threatened to stage a walkout for their health if they had to stay overnight in the uncomfortable rooms for another day.

When the bidding ran on until Thursday, some top executives reportedly asked the NBTC to allow them to call their wives. They even offered to talk to their wives on a speakerphone, so NBTC staff could hear what they were saying, to ensure transparency. NBTC staff insisted that such communications could not be allowed.

On Thursday evening, the NBTC allowed the bidders to request daily necessities, such as clothing and favourite foods, from home. Within an hour, heaps of what they requested were sent to the NBTC.

Unfortunately, they had no chance to enjoy them as after the bidding continued for a few more rounds, it ended at about 7pm.