BMI View: Thailand's telecoms sector has faced a tumultuous few months with the Prime Minister approving a number of controversial new laws and policies that threaten to send the country back to an industry model akin to the concession-based revenue-sharing regime , that saw private companies partner with the ineffi cient state-owned enterprises. AIS has unveiled a plan to develop a nationwide broadband network to rival those of TrueOnline and TOT, while True has committed to further expansion of its 3G/4G networks , as well as its core wireline infrastructure. More recently, DTAC committed to a long-term expansion of its tri-band mobile network and True welcomed China Mobile as an investment partner.
Strong demand for 3G/4G services helped sustain subscription growth momentum in 9M 2014, although much of this was achieved through cannibalisation of the existing 2G market. However, in light of recent events, we have made some changes to our five-year mobile sector forecast and expect there to be 102.5mn subscriptions by 2019.
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 THB180 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
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 late 2015 and time will tell if the new government lives up to its promise without adding further bureaucratic 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.