The junta’s order of a one-year suspension of the fourth-generation (4G) spectrum auctions has come as no surprise to mobile operators and the national telecom regulator, who said Thailand was not ready for what they called an immature technology.
The suspension will ensure transparency of the auction process and of the readiness of the local 4G mobile market, they said.
The National Council for Peace and Order (NCPO) yesterday instructed the National Broadcasting and Telecommunications Commission (NBTC) to suspend the auctions of 4G licences to provide high-speed wireless broadband services on the 1800- and 900-megahertz spectra for one year.
The auctions had been due to take place next month and in November.
The junta wants the NBTC to amend several impractical legal issues, particularly some sections of the Frequency Allocation Act (FAA), before the auctions take place next year.
Its latest order requires the NBTC to retain mobile customers on 2G networks, now handled by True Move and Digital Phone Co (DPC), until the 4G auctions can be held.
There are 5 million 2G customers on True Move’s network and 4,000 on DPC's network.
NBTC secretary-general Takorn Tantasith said the one-year suspension clearly indicated the 4G auctions could take place after next July.
He said the NBTC was working on the amendment of the FAA to eliminate impractical legal loopholes.
The amendment is expected to be completed next month and submitted to the NCPO for consideration.
Mr Takorn cited Section 45 of the FAA, which limits the regulator to allocate frequencies only through an auction, and Section 84, which stipulates that state telecom TOT Plc cannot book any revenue related to concessions in its financial statements, as areas that need to be changed.
Somchai Lertsuthivong, chief executive of Advanced Info Service Plc (AIS), said the suspension could benefit the overall mobile industry.
"It could be a good opportunity for operators, network and equipment suppliers and handset makers to develop their products to reduce costs and meet rapidly changing market demands," he said.
Mr Somchai said the suspension will allow 4G to reach technological maturity in the country.
Jon Eddy Abdullah, chief executive of Total Access Communication Plc, the operator of DTAC, said if the suspension was for only one year, in line with the junta’s announcement, there would be no immediate effect on the company, as its current spectrum was sufficient to serve customers.
But he acknowledged the mobile industry needed the auction for long-term investment plans and service quality with advanced technologies for Thai consumers.
An industry veteran said the delay in the 4G spectrum auction might have little effect, as 4G technology was still far away from maturity due to its different technical platforms and the limited availability of 4G handsets.
"Thailand can wait until next year for 4G," the source said.
The source said the big challenge for mobile operators was to focus on how to migrate their existing 2G customers to 3G networks to improve revenue.
Mobile operators now pay up to 30% of their revenue on concession fees compared with only 5.25% under the licensing regime.
"What's the point of 4G now? Mobile users in Thailand can wait a year for the market to become more mature with a greater variety of 4G handsets," the source said.
Telecom stocks faced selling pressure shortly after the junta's announcement.
Their fall also pushed down the SET index to yesterday's trough of 1,523.53 points before buying on dips emerged to pare early losses. The main gauge edged down 0.15% to 1,533.41 points in brisk turnover of 65 billion baht.
AIS (ADVANC) shares led the telecom sell-off, losing 11 baht or 4.87% to 215 baht, while its parent INTUCH fell 2.50 baht to 71 baht. TRUE shares shed 40 satang to 12.40 baht, while DTAC dipped 3.50 baht to 109 baht.
Phillip Securities analyst Rutsuda Tweesaengsakulthai said investors dumped telecom stocks on a knee-jerk reaction, as the auction postponement was beyond expectations.
The negative sentiment is expected to weigh on telecom stocks for one or two more trading days, she said, adding that the sharp retreat would present buying opportunities as dividend yields increased.
Moreover, an absence of hefty investment capital demand will prompt SET-listed telecoms to pay out higher dividends, and this could be another force to draw investors to buy back shares soon.
Some telecom shares are among dividend plays.
"Even though the auctions will be delayed, this won't have an adverse effect on those companies' business plans. The licences of AIS and True Move can be extended," Ms Rutsuda said.