We’ve been following Thailand’s mobile saga with great amusement the past few days watching the # of bidding rounds continuing to increase and the value of each bid getting higher and higher.
So after a 30 hr bidding marathon the results came out as follows:
  • It was concluded at the 86th round!
  • True won the first license, 1710-1910 MHz and 1805-1820MHz for THB 39.79b bn
  • ADVANC won the second license, 1725-1740 MHz and 1820-1835 MHz for THB 40,986 bn
  • JAS dropped out @ THB 39.996 bn
  • DTAC dropped out @ THB 17.506 bn
  • The base prices for bidding were THB 15.91 bn per license.
So what?
  • Well the ToR states that the maximum 4G rates must be less than THB 0.69/minute for voice service and THB 0.26/megabyte for data service, both of which are lower than existing 3G service charges.
  • The winners (ADVANC & TRUE) must roll out their 4G networks to cover half the population within 2 years and raise it to 80% within 4 years.
Again so what?
  • It appeared to be a wonderful case of gamesmanship, JAS which doesn’t have any money appears to just be there to increase the bidding prices for fun, TRUE needed the spectrum to ensure they can be top of the hill, and ADVANC really needed the first license because its existing spectrum was/is expiring. 
  • In the next round we expect something like this occurring
1) ADVANC still needs more spectrum so they’ll bid for whatever it takes
2) JAS will have a good time, if they win a license they’ll have to immediately find a partner
3) DTAC well its time for them to stay relevant in this game, so expect a decent bid here too.
4) TRUE doesn’t need this spectrum as badly as ADVANC and DTAC

Are these prices going to hurt the dividends?
  • Well JAS, yes of course, their market cap is THB 30 bn explain how on earth they’ll pay for this….??
  • DTAC, yes of course, telenor ramped up debt to pay themselves nice divvy’s to expand in Myanmar and India and yes an additional thb 15-20bn in debt may lower its previously high payouts
  • TRUE, well if they bid for the next round…maybe the CEO will have to dig into papa’s pockets again.
  • ADVANC, their D/E isn’t too bad, it may max out at 2x depending upon the price of the next round of license, so things should still be ok for them.
Anything else?
  • I still don’t like this industry, costs rising for all the players, revenue per user dropping and its a constant dog fight with packages, how will this end well in the future?
  • Wonderful for Thailand, the country’s debt to gdp levels may now drop slightly!
  1. Best thing out of all this was INTUCH dropping to at 68.50 per share. Not quite the 66 I was hoping for but still very attractive. Could go even lower this Monday due to the events in Paris but I doubt it.

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