FRIDAY, March 29, 2024
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AIS buying 900MHz licence outright would prevent shutdown of 2G service

AIS buying 900MHz licence outright would prevent shutdown of 2G service

IF ADVANCED Info Service (AIS) can clinch a licence to the 900-megahertz spectrum right now, instead of waiting for a new auction in June, it will be able to assure its customers using its second-generation service on that frequency that they will not fac

AIS chief executive officer Somchai Lertsutiwong has now answered questions over why the company is willing to pay for the licence at a price it previously said was too high.
When its subsidiary Advanced Wireless Network (AWN) proposed to the National Broadcasting and Telecommunications Commission (NBTC) on Monday that it be awarded a 900MHz licence, for which it was willing to pay Bt75.654 billion, this raised the eyebrows of some analysts and academics.
They wondered why AIS had backtracked from what it said previously, that this price was too high. It is the same price Jas Mobile Broadband bid to win this licence at last December’s auction, in which AIS and other telecom operators also participated.
Some observers said that if AIS is willing to pay this hefty price, it should join in the new auction set for June 24 and grab the licence at the minimum starting bid of Bt75.65 billion, so there would be no need for the NBTC to ask Prime Minister Prayut Chan-o-cha to decide whether the NBTC can grant AIS’s request to buy the licence right away.
But in a letter from Somchai, circulated to employees at 11pm on Tuesday, he said he believed that instead of waiting three months for the new auction and putting its 2G-900MHz subscribers at risk of a service shutdown, AIS should offer to buy the licence.
“Many may ask why AIS stopped raising the bid at the previous 900MHz licence auction, saying the price had got too high, and yet today we offered to buy the licence at the same high price. It’s because the competition situation changes all the time and our migration of 900MHz subscribers according to the original plan has experienced greater difficulty than expected. So we have to adjust to the situation in order to prevent possible service disruption,” the letter said.
While waiting for the government’s decision on the issue, AIS will hold a board meeting to ask for approval to buy the licence.
AIS has 8.2 million 2G subscribers, of whom 7.8 million are on AWN but still roam with AIS’s 900MHz network.
According to the rules governing the December auction, AIS had to shut down the 900MHz service once the NBTC awarded the licence to either of the winning bidders, which it did so to True Corp in mid-March.
The NBTC telecom committee ordered AIS to shut down the service on March 15 at midnight, but the company sought a Central Administrative Court injunction against the order. The court granted the injunction to compel the telecom committee to allow AIS to continue using 900MHz until April 14.
Later AIS asked the NBTC to extend that deadline to June 30.
According to a telecom analyst, AIS is likely to lower its dividend payout ratio to 70 per cent from the present 100 per cent in order to pay for the 900MHz spectrum, if it really buys the licence. 
The payment for the 900MHz slot would be made from this year through 2019. To keep net gearing below 200 per cent, the lower payout ratio would be required through 2019.
The analyst believes the chance of AWN getting the spectrum is high, but its cost is likely to pressure AIS’s earnings. Still, the licence to the 900MHz spectrum should enhance AIS’s competitiveness in the medium to long term and would be a negative for its rivals.
 
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