Information & Communication

Information & Communication (ICT) 

- 4G auction regulation draft approved  

The National Telecommunications Commission of NBTC yesterday approved the NBTC’s draft of regulations for a 4G auction on 1,800 MHz spectrum. According to the draft, the NBTC will auction two licenses at 12.5 MHz each, totaling 25 MHz (the bandwidth comes from TRUE and DPC, a subsidiary of ADVANC, whose concession expired in September 2013), at a reserve price of B11,600m per license, decreasing 9% from the reserve price in 2014 and equating to 70% of the actual value of the frequency; however, if there is only two bidders, the reserve price will increase to B16,570m. The NBTC may also add unused five MHz bandwidth DTAC would like to return to the regulator in the auction as well, waiting only for a conclusion this week whether or not the return can be made without any conditions attached. After this, three more months are needed for preparation and then the auction will be commenced on November 11, 2015. 

- The more progress, the more benefit for ADVANC 

ADVANC will benefit the most from this situation; since it is the only player in the market that still does not have a 4G service and has the strongest financial status among peers, it is likely one of the auction winners, and the new license will help it capture market share from DTAC and TRUE which have a head start in providing 4G service (at present, ADVANC is only able to keep its current market share). For the other 12.5 MHz license, a potential winner is DTAC, TRUE, or JAS. DTAC and TRUE needs the additional bandwidth to increase its current 4G capacity from 5MHz and 10 MHz, respectively, to become a biggest 4G provider in the market. JAS, on the other hand, is not likely to win; since the company does not have a subscriber base and network for 4G service, it would possibly offer the lowest bidding price when compared with the other three bidders. 

- Top picks: ADVANC, INTUCH  

In spite of the progress in the 4G auction plan, the sector’s profit growth would still be close to the market’s since its earnings may be lower than expected as a result of the slack economic rebound. We reiterate NEUTRAL. Top picks are ADVANC(FV@B285) and its parent company INTUCH(FV@B113) for both of them will get positive sentiment from every progress in the auction plan.