BMI View: The Thai telecoms industry has faced a multitude of challenges in the past year with the government and the Prime Minister approving a vari e ty of controversial new laws and policies that threaten to send the market into an industry model akin to the concession-based revenue sharing regime as private companies partner with inefficient state owned enterprises. AIS intense to develop a nationwide broadband network to rival TrueOnline and TOT , whilst True has committed to further 3G and 4G expansion. The spectrum auction intended to take place in Novem b er 2015 is marred by legislative troubles and the mandatory sim registration will have a negative impact to our forecast in the months to come.
Strong demand for 3G/4G services helped sustain subscription growth momentum in FY2014, although much of this was achieved through cannibalisation of the existing 2G market. However, in light of recent events, we have made downward revisions to our five-year mobile sector forecast and expect there to be just under 99mn subscriptions by 2019.
Q1 2015 saw massive subscription losses due to inactive account terminations and this trend is likely to continue into the rest of 2015.
Price competition and aggressive marketing campaigns are exerting downwards pressure on mobile ARPU. Furthermore, declining SMS volumes are threatening operator revenues and margins, as subscribers adopt IP alternatives, such as WhatsApp and Viber. ARPU is forecast to reach THB189 by 2019, down from THB204 in 2013.
The fixed-line market is stagnating and we expect it will decline by an average of 2.9% a year over our five-year forecast period (2015-2019), bringing penetration down to 7.5% in 2019.
Key Trends And Developments
The new sim registration law that came into effect on August 1 2015 ensures mandatory registration of all sim cards. This will have a downward impact on the Thai mobile market as millions of inactive and semi active connections will be deactivated. The operators have been given till February 2016 to adjust to the new registration rules. BMI will monitor the situation and revise the forecasts in due time as the data becomes available.
On January 6 2015, Thailand's cabinet of ministers approved eight draft laws that effectively stripped the National Broadcasting and Telecommunications Commission (NBTC) of its power to assign and manage frequencies. The new Digital Economy Committee would decide on which spectra should be auctioned off for commercial purposes and which should be assigned for public benefit. Later on in the same month the Prime Minister pushed through a number of other laws with little consideration given to consulting with market players or the national regulatory authority. The new cyber security law removes judicial checks and balances in authorising surveillance and allows officers to infiltrate computer networks and systems to read instant messages and e-mails. It also allows the Prime Minister to directly order telecoms companies to act or refrain from acting and to summon executives for testimony. BMI believes that in light of this, it is unlikely that a public auction on the 900MHz/1800MHz spectrum will be held and the frequencies will be allocated to state-owned operators TOT and CAM Telecom to improve their performance.
The launch of new spectrum technologies is intended to take place in November 2015 and time will tell if the new government lives up to its promise without adding further bureaucratic hurdles. As of August 2015, the entire process is marred by legal and administrative hurdles.
The government has also ordered for TOT and CAM Telecom to optimise their operations. End of January it was reported that CAT Telecom was in partnership talks with South Korea's SK Telekom, as well as with existing infrastructure-sharing partner True Corp. CAT's sister concern TOT is said to have shortlisted three private telecoms firms as prospective partners.
The most notable development in Q3 2014 was AIS's September 2014 announcement that it had petitioned the regulator for permission to enter the local wireline broadband market. It plans to invest THB4.6bn (USD144mn) in the project, of which THB1bn would be invested in the first year of roll-out. A timeframe for the proposed development has not been disclosed but, as the company's application notes that 2mn households are set to be connected with broadband over the next four years, its thinking is long-term in scope.