4G Madness
  • Boom! There we go, the most expensive 4G license bidding price in the world, Thailand, take a bow, not only does the country have the most number of coups in recent history it can now have another reason to be in the Guinness Book of World Records. A quick recap:
  • During the week the stock prices of ADVANC, DTAC, TRUE and JAS were bouncing up and down
  • 66 hours of bidding, 199 rounds of price offers with TRUE and JAS paying a combined THB 151.95 bn.
  • True won with a THB 76.298 bn bid, JAS won the second license with a THB 75.564 bn (nearly 5x above the reserve price and 50% higher then our highest office pool vote)
  • AIS ended bidding at THB 75.975 bn and DTAC quit at THB 70.180 bn

So what?

  • As the smartest man in Thailand told me “This is the worst possible outcome for Thailand’s telecom industry and the consumer will come out at the losing end with service quality dropping across the board”  and “If the NBTC is smart, it should reallocate some of the digital TV, 600 MHz to mobile, but they are a bunch of ball-less !@#$ups”
  • We have no idea how JAS nor TRUE will pay for this, they’ll need some THB 8 bn in cash, and THB 68 bn in bank guarantees in the next 90 days. Expect to see a lot of capital increases, Investment Bankers should be licking their lips at this, minority shareholders will be cursing under the breaths if they are holding shares in either stock. Note: A capital increase takes 60 days.
  • For TRUE its quite simple the conversation will be – “Daddy I need more money, SCB bankers don’t cry, you’ll make a fee and we’ll pay you some interest on the loans, the CEO will probably buy himself another Ferrari, and don’t forget we are your biggest clients so in reality we own you, China Mobile, well it’s your own fault for not requesting any blocking rights when you bought a 19% stake in us :p”
  • For JAS..A PP announcement in the morning? A potential takeover target? We’ve heard its the koreans, SK Telecom, willing to back them but much remains to be seen, what else could he sell to an infrastructure fund?!
  • DTAC’s concession expires by 2018, so they are praying that there won’t be any delay in the next round of bidding and I dare not imagine how management there is feeling at the moment
  • AIS also needs more spectrum and is faced with having to double its capex to rollout nationwide 1800/2100, not the worst position but at least it appears like their dividend payout’s should remain the same.
  • Anything positive from this? The country benefits? Debt to GDP drops? More $ for the military to give to low income earners? Who knows…Although we now will have “real 4G”

Dictator love
Hun Sen and Prayuth were showing one another a serious amount of love (US ambassador take note on how to deal with locally “democratically elected” leaders) with Thailand and Cambodia agreed on Friday to triple the value of bilateral trade and develop their partnership for mutual benefit. So what’s the result of this little lovefest? They key positives are:
  • Triplying bilateral trade over 5 years from the current US$ 5 bn via connecting the economic zones in Thailand’s Sa Kaeo province and the adjacent Banteay Meanchey province of Cambodia
  • Interestingly Thailand asked Cambodia to share its water to ensure power security, while Cambodia expressed gratitude towards Thailand for supplying electricity to parts of Cambodia where there were no local transmission lines.
The Japanese have finally agreed to take a 1/3 stake in the project, could it be because the Chinese were becoming closer and closer to Thailand that they had to ensure they still had some involvement in the country? So what does this mean, who benefits? Well listed include ITD (they finally pulled it off!) and ROJNA? Perhaps its time to take a closer look at the latter versus the former.
Final Post
I…am….tired! It has been a rather exhausting 6 months and I’m going to take the next 2 weeks off from posting here even though we’ll still be in the office so if there are comments/emails I’ll still see them and respond if I can add any value.
Oh a forecast for 2016? Ignore forecasters, I don’t care if its JP Morgan or Goldman Sachs, no one really knows what will happen, if they did they wouldn’t be writing forecasts, it’s all marketing all we know is that the markets will continue to surprise us either positively or negatively.
Thanks again for reading, have a great XMAS and New Years.
  1. Merry Xmas Pon, given how popular Intuch is with us dividend investors, it is a terrible result for 4G.

    Funnily enough one of the NBTC commissioners came out and said he can’t see how Jasmine will make money based on how much they paid for the license…

    • for advanc & intuch – I think they’ll continue to be #1, I’m not worried about a dividend cut nor anything of the kind UNLESS you really believe that JAS can take market share away from them (and believe that pigs fly)

  2. Wonderfull post, this blog is must read for everyone interested investing in Thailand. Happy holidays.
    I own only one stock in Thailand, MFEC and i am intrested to see how they can benefit for this 4G development

  3. Dollar rising and worst foreign capital quarter outflow from Thailand since 2008….
    – history do not repeat, it rhymes – situation have something like 1997, hope I’m wrong of course;-)

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