FRIDAY, March 29, 2024
nationthailand

Jasmine, True have no need to recap for 4G service

Jasmine, True have no need to recap for 4G  service

JASMINE MOBILE Broadband (JASMBB), one of two winners of 900MHz telecom licences, says it has no need to undertake recapitalisation to finance 4G service development but could seek other channels including bank loans, operating cash flow, and its infrastr

The other winner of the four-day auction that ended with huge final bids on Saturday, True Move H Universal Communication (TUC), also says it will not need to recapitalise.
They shared a common view that their fourth-generation wireless services will focus on seeking new markets and new revenue sources, not only on maintaining their existing customer bases.
Each of the licence winners held a separate press conference yesterday. The unsuccessful bidders, Advanced Info Service (AIS) and Total Access Communication (DTAC), were to hold news conferences today.
When the auction wound up on Saturday, TUC bid Bt76.3 billion for its licence on the 900-megahertz spectrum, and JASMBB bid Bt75.6 billion. These prices are almost five times the minimum starting bid. 
The National Broadcasting and Telecommunications Commission’s telecom committee approved the auction results yesterday.
The new player in the 4G wireless broadband market JASMBB, a wholly owned subsidiary of Jasmine International (JAS), has set the ambitious target of making a profit from its 4G-900MHz service within three years, when it expects to have 5 million subscribers.
“We’ll spend Bt20 billion on the roll-out of more than 10,000 base stations nationwide within three years and will share infrastructure with either TOT or CAT Telecom. We’ve already talked with them on the matter,” JAS chief executive officer Pete Bhodaramik said yesterday.
“We’ll launch the 4G service in the next few months. Next year you will see a new 4G service choice and a new brand.” 
He added that if JASMBB could gain 10 per cent of the Bt300-billion telecom market, it could make Bt30 billion in annual revenue. And he believes that 10-per-cent share is attainable in three years.
Meanwhile, Vorapak Tanyawong, president of Krungthai Bank, said KTB had little exposure in telecommunications companies compared with other major banks, which means the bank has room to grow in this sector either in lending or in providing financial structuring advisory.
The winners of these licences will not find it easy to run 4G businesses because of the high operating costs. When European telecoms faced this problem, they finally resorted to mergers to survive in the industry, he said. 
There are four telecom operators in Thailand, which are not expected to face the same situation as in Europe, but the high prices seen at the two recent auctions mean all banks will have to be cautious when lending to the winning bidders. 
Vorapak added that Jasmine International, the newcomer in the field, was expected to face the most challenges because it will have to invest a lot to compete with the established players.
Pete said JASMBB targeted 3 million 4G-900MHz subscribers within two years by tapping the existing 2 million household subscribers of JAS’s flagship fixed broadband Internet service operator Triple T Broadband, well known for its 3BB brand.
He expects the JASMBB 4G subscriber base to rise to at least 5 million within three years.
Winning the licence marks another milestone for the JAS group. It will enable JAS to offer converged wireless and fixed broadband services.
“It’s not difficult for us to meet the targets,” Pete said.
Earlier telecom-industry players questioned whether with such a hefty upfront licence cost, JAS would have the capacity to make a profit in the market, which has been dominated by three other players.
Pete said JAS would fund the development of the business by leveraging its Jasmine Broadband Internet Infrastructure Fund (JASIF), which has around Bt10 billion in cash. The JAS group’s operations generate operating cash flow of Bt5 billion each year.
JAS has already issued warrants with five-year terms to raise Bt10 billion. Moreover, it is doing project financing with banks and will be able to use credit from its network equipment suppliers.
“All of these are enough to fund our business development,” Pete said.
Furthermore, JAS will have JASMBB listed on the stock market within three years to raise funds, and JASMBB could sell its new network to JASIF. JASMBB wants to secure a partnership before listing on the stock market.
“We also have potential partners, which will acquire JASMBB shares at a premium price. JAS shareholders have nothing to worry about because JAS itself will not raise capital. The transactions, including the borrowing, will take place in JASMBB, and all shareholders will benefit from our obtaining a 900MHz licence,” Pete said.
He added that JAS had yet to conclude a deal with potential partners. It is in talks with more than two prospective partners but he declined to specify their names. He also declined to respond when asked by the press if the potential partners include SK Telecom.
Pete said JAS had been surveying customer demand for 4G for three years and had received a good response. It has prepared locations for installing telecom towers and is in talks with state telecom agencies to rent their infrastructure to provide 4G service.
JAS will use its existing network of 3BB customer-service shops to support its 4G service and it has trained staff to operate the service. 
Pete said the funds for the fourth instalment of the upfront licence fee will come from many sources including a JASMBB initial public offering, he said.
The 10MHz of bandwidth it now holds on the 900MHz spectrum can cater to 10 million users.
He admitted that he was shocked to learn that True, and not AIS, had won the other 900MHz licence.
 

Jasmine, True have no need to recap for 4G  service

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