The telecom regulator is quietly drawing up plans to call a new auction round for the 900-megahertz spectrum if bid winner Jasmine International fails to secure the massive funding needed.
The development comes in the wake of rumours circulating in the industry that Bangkok Bank initially rejected Jasmine's borrowing plan.
"We will raise the planned reauction issue at our legal panel next week for consideration," said a high-ranking source at the National Broadcasting and Telecommunications Commission (NBTC).
"The critical elements to be raised at the panel will include the amount of default penalty and the conditions of the reauction."
Jasmine International, through subsidiary JAS Mobile Broadband, was given until March 21 to make its first payment of 8.04 billion baht, half the estimated real spectrum value.
The company must post three bank guarantees for the remaining amounts including an additional 25% of the spectrum value to be paid this year, a final 25% in 2017 and the remaining bid amounts in 2018.
"The NBTC has the right to confiscate the guarantee JAS placed before the auction worth 645 million baht, 5% of the reserve price," the source said.
JAS won the first licence for 75.7 billion baht or 487% higher than the reserve price of 12.9 billion baht.
True Move H Universal Communication (TUC), a subsidiary of True Move, won the second licence for 76.3 billion baht or 491% above the reserve price.
"TUC will still have to pay for the amount the company bid for and has no right to join any new round of auctions," the NBTC source said.
An industry source said the bank initially rejected JAS's borrowing plan and told the company to submit a new plan, citing the exorbitant licence cost.
The source said a prospective South Korean partner scrapped an alliance with JAS, adding: "Personally, I think JAS is likely to be unable to pay for its licence."
Another industry source said TUC was unwilling to make its first payment, waiting for a clearer signal from JAS.
The NBTC source said the regulator did not want to see JAS embracing failure, which would reverberate through the telecommunications sector as a whole.
"We may have to seek suggestions from the Council of State on the planned reauction before implementing any measures in order to ensure fair practices to all parties as well as preventing any possible legal backlash," the source said.
The source said Jasmine Group would suffer damage if its subsidiary defaulted since the two had the same major shareholders and top executives.
The NBTC source said it would be difficult to determine an exact time frame for the reauction plan.
"The new allocation of the 900MHz spectrum may have to be done by auction instead of allowing the second runner-up in the bid to overtake the ownership of the 4G licence at [JAS's] winning price of 75.7 billion baht," the source said. "I believe the reserve price for the reauction could start at a price close to the winning prices."
Somprasong Boonyachai, former chairman of the group executive committee of InTouch Plc, the parent firm of Advanced Info Service Plc, said AIS was interested in a new 900MHz auction if the reserve price was not set at the previous winning price.
Mr Somprasong, who retired on Dec 31 and has been named as an adviser to InTouch's new chief executive, said the company had no need to secure the 900MHz licence, as it could wait for a new round of auctions for the 1800MHz spectrum in the next two years.
JAS shares have plunged 36% from their closing price on Dec 18, one day before the auction result was announced. They closed at 3.06 baht Thursday.
TRUE shares have also suffered, down 8.3% since Dec 18 to close at 6.65 baht Thursday.