ICT Sector
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3G licensing right ahead as Administrative Court throws out lawsuit
NEUTRAL
Index Sector 184.84
SET 1,332.92
Administrative Court throws out Ombudsman’s plea
3G licensing expected as scheduled, benefiting mobile
operators especially DTAC
Maintain NEUTRAL. INTUCH and DTAC are top picks
Administrative Court throws out Ombudsman’s plea
The Administrative Court yesterday threw out the Office of the
Ombudsman’s lawsuit which sought to suspend the awarding of 3G
licenses for the 2.1 GHz spectrum bid on 16 October 2012 to the 3 bid
winners. The court voted to dismiss the lawsuit, saying that the NBTC
does not have civil servant status and so does not fall within the
Ombudsman’s jurisdiction and the Ombudsman has no mandate to
petition the court. Secretary of the Office of the Ombudsman said the
agency will review the court's ruling before deciding whether to appeal.
Meanwhile, Settapong Malisuwan, chairman of the NBTC's telecom
committee, said that, as the lawsuit was dismissed, the NBTC could
possibly give 3G licenses to the operators by the end of this month.
3G licensing expected as scheduled, benefiting mobile
operators especially DTAC
The Administrative Court’s ruling posted a benefit on the ICT sector as it
cleared way for the NBTC to grant the 2.1 GHz-3G licenses to the mobile
operators by the end of December. The 3G network installation will then
be conducted, followed by a commencement of 3G service in Bangkok
and other big cities since 2Q13, which will enhance efficiency and
capacity of data service because the current concession has limitation in
capacity 3G standard. Moreover, under the new concession, operators’
cost of service will decrease significantly from a decrease of income
sharing from 25-30% of total service income to only 10-15% (license
cost included). After the 3G service starts, there will be continuous
migration of 3G customers from the current license which has high cost
to the new license which has lower cost, on an assumption that the
operators would be able to carry migration of high net worth customers
(10% of total customers) to the new license in 2013. The operator that
will benefit the most from this issue is DTAC. Net profit growth in 2013
is projected at 18% as now the company is paying income sharing of
30% of its total income. Meanwhile, ADVANC will get less benefit
because its current income sharing is lower at 25%, so net profit growth
in 2013 is estimated at only 12%yoy.
Maintain NEUTRAL. INTUCH and DTAC are top picks
The lawsuit dismissal likely confirms that the new 3G service will surely
be provided by 2013. However, prices of some stocks in the sector have
already risen to reflect the news, especially ADVANC which has only
13.6% upside left now. Consequently, we maintain NEUTRAL weighting
for the sector and select INTUCH ([email protected]) and DTAC ([email protected])
as top picks because they have the highest upside of 30.8% and 26%
respectively. We also reiterate buying ADVANC (FV@B250) when the price weakens.
