SPECTRUM AUCTION Winning 1.8GHZ bid a big boost to DATC
Total Access Communication Plc’s market position will be strengthened if it can successfully secure the 1.8GHz spectrum that will be up for auction as its relatively weak spectrum portfolio has constrained its business, says Fitch Ratings.
On May 7, Thailand's National Broadcasting and Telecommunication Commission announced the rules for the auction of three slots of 1.8GHz spectrum with a target auction date of August 4 2018. The regulator has also set the starting price at Bt37.5 billion for each of the slots.
Fitch expects DTAC to win one slot of the 1.8GHz spectrum as it has a greater and more immediate need for new spectrum and therefore more incentive to secure the frequency in this round of auction than other likely bidders - Advanced Info Service Public Company Limited (AIS; BBB+/AA+(tha)/Stable) and True Corporation Public Company Limited - who, in Fitch's view, should have enough spectrum to support their operations in the medium term.
However, the potentially high acquisition cost for the spectrum and an additional payment to use TOT Public Company Limited's (TOT) 2.3GHz spectrum could put pressure on DTAC’s cash flow and financial leverage in the medium term.
DTAC needs new spectrum over the medium term to replace the 35MHz that it is losing as its 2G concession will expire in September 2018. We expect the company to need the 1.8GHz spectrum, even though it has the 2.3GHz contract with TOT, as DTAC is still largely reliant on the frequency to provide 3G and 4G services for its customers.
Fitch believes DTAC's loss of market share to competitors over the past few years was partly a result of its inferior spectrum holding. Additional spectrum and more network investment could help improve DTAC's network quality and slow its decline in market share and service revenue.
