Boston, MA -- (SBWIRE) -- 02/23/2013 -- BMI View: Thailand's telecoms market is characterised by a mobile market approaching saturation, a fixed market in decline since 2007 and a very low broadband penetration rate. While growth opportunities exist, particularly in the broadband sector, the heavy degree of state control and ineffectual regulation of the telecoms to date, coupled with political uncertainty and the economic fallout from the 2011 floods and weak global economy, do not, in our view, present a favourable investment climate.

Key Data

- Mobile subscriber growth has slowed considerably, although we expect strong competition in the market and the forthcoming 3G licence auction will see penetration reach 130.6% in 2017.
- Price competition is exerting downwards pressure on mobile ARPU and, although subscriber mixes are improving, there is a high proportion of prepaid customers.
- The broadband market supports three competitors but requires significant investment in infrastructure if penetration is to beat our current forecast of 7.6% by 2017.
- The fixed-line market is stagnating and we expect it will decline by an average of 3-4% annually over the forecast period, bringing penetration to 9.3% in 2017.

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Key Trends And Developments

The auction for 3G spectrum was finally held - after years of regulatory hurdles, legal wrangling, political infighting and operator intransigence - in October. The licences will not be awarded until January 2013, leaving the door open for legal challenges to the auction after allegations of price collusion between the three winners - existing mobile operators AIS, DTAC and TrueMove. The auction raised THB41.7bn (US$1.36bn), just 2.8% above the government's reserve price and 30% lower than the regulator had anticipated.

The government has already faced criticism that the auction was uncompetitive and underpriced. While the financial offers were well below expectations and seemingly encountered no competition from any of the alternative players that had been expected to bid, this does not necessarily constitute collusion on the part of the winning bidders. BMI believes that the three winners were the only viable contenders in terms of expertise and financial resources and that, having been frustrated by the lack of movement on 3G licensing over the past five years, they would have been keen not to bid aggressively against one another in order to ensure the auction proceeded as smoothly and as quickly as possible.

The successful auction paves the way for the licensing of 4G frequencies in 2013.

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