Information & Communication Technology

NBTC to start 1800-MHz and 900-MHz spectrums bid in August 2015 Overweight

Information & Communication Technology (ICT)

- NBTC secretary-general Thakorn Tanthasit promised that he will accelerate the

auction of 4G spectrum bandwidth licenses (two licenses of 1800 MHz spectrum,

and two licenses of 900 MHz spectrum) within 2015 in order to support higher

demand for internet access and the digital economy policy. The bid was initially

scheduled in late 2014, but was postponed by at least one year from September

14, 2014 by the National Council for Peace and Order (NCPO) for deliberation.

The NBTC has been working on the proposal for the bid since December,

probably taking five to six months. The bid proposal is projected to be approved

within February 2015, and then the auction is expected to be held in August

2015.

- ADVANC to benefit most

The acceleration of the auction would benefit ADVANC (currently the only

mobile operator without 4G network) most because it needs 1800 MHz

spectrum to provide 4G network to support data service revenue growth in the

long run. ADVANC's two current spectrums cannot provide 4G network 1)

concession of 900 MHz spectrum will expire in September 15, 2015, and it does

not technically support 4G network. 2) 2.1 GHz, which is currently used to

provide 3G network to 43 million subscribers, is not sufficient. With the

strongest financial position among peers, ADVANC is projected to win both

licenses. If it wins the 900 MHz spectrum, it would still be able to operate 2G

network for 2G subscribers and migrated subscribers who still use old-feature

mobile phones (900 MHz spectrum needed for data roaming). Meanwhile, DTAC

and TRUE would benefit less than ADVANC because they are currently operating

4G network with their own 2.1 GHz spectrum that still has remaining service

capacity from 3G network.

- Top Picks: INTUCH, ADVANC

This news does not only have positive sentiment on the ICT sector, but it also

ensures long-term growth in the sector (not included in our forecast yet). Our

recommendation is OVERWEIGHT. Top picks are INTUCH(FV@B113), ADVANC's

parent company (holding 40.45% stake) which the highest upside in the sector,

and ADVANC(FV@B285) with 14.4% upside and over 5.5%p.a dividend yield.