Information & Communication

- Progress seen from both 900-MHz, 1800-MHz 4G bid  

There was progress in 4G license bidding yesterday. For a 1800-MHz spectrum (a world standard spectrum for 4G service), the National Telecommunications Commission of NBTC approved a list of four qualified bidders, which include JAS, DTAC, ADVANC, and TRUE. A mock bidding will be held on November 5 while a real bidding is scheduled on November 11. For a 900-MHz spectrum, the bidding is rescheduled from December 15 to November 12, which is close to the 1800-MHz bidding, possibly in an attempt to raise confidence that the NBTC can righteously and legally reassign the 900-MHz spectrum from TOT to other service providers. Earlier, TOT, the owner of the spectrum, insisted to keep its right to use the spectrum despite the termination of the concession and demanded that a court issue an injunction to suspend the bidding. However, the injunction issuance is unlikely because the NBTC must comply with the Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services. In addition, the NBTC also set the terms that mobile service rates for voice and non-voice services have to be reduced after the bidding, from averagely B0.69/minute and B0.26/MB at present. 

- More progress in 4G bid, more benefit for ADVANC  

Given the continuously progressing 4G bidding process, we believe the bidding could take place in November as scheduled. This would benefit ADVANC most since it needs both 1800-MHz and 900-MHz licenses; owing to its insufficient capacity at present, ADVANC is the only mobile operator without a 4G service. Most financially ready, ADVANC is likely winning both licenses; the 1800-MHz spectrum will be used to end its weakness regarding 4G service while the 900-MHz spectrum will be used to provide service for 2G customers and increase efficiency of its 3G service. Additionally, the control of service rates after the bidding is in line with our view that the 4G service would rather help maintain service efficiency of mobile companies than add value. However, we believe mobile operators would be able to maintain their average revenue per user (ARPU) after the bidding; the decreasing service rate according to the NBTC’s terms would be compensated by automatically increasing usage as a result of the new technology (a higher speed of data transfer). 

- Top picks are ADVANC, INTUCH 

Despite such progress, there is still a risk of forecast down revision because all bid winners will have higher expenses from the 4G network investment. Therefore, we maintain NEUTRAL for the sector. Top picks are ADVANC(B285) and its parent company INTUCH(FV@B113), which would benefit from every progress in 4G bidding.