Can Runaway Spectrum Prices Stimulate New Business Models?
December 21, 2015
Every once in a while a spectrum auction brings big and interesting surprises. The last example is the 900 MHz Thai auction concluded last week which raised close to THB152 billion ($4.2 billion) for the right to use two licenses of 2×10 MHz. This is over 6x the reserve price THB12.8 billion per license, and one of the most expensive in the world. To put this into another perspective, the auction of 1800 MHz spectrum concluded last month in mid November raised to total of THB80.8 billion ($2.25 billion) for two licenses of 2×15 MHz. That’s 2.8x lower than the 900 MHz band on per MHz-PoP basis.
|Winner||Frequency||BW (MHz)||THB, billion||USD, billion||MHz-PoP THB||MHz-PoP USD||Validity Years|
|AIS||1710-1725 MHz/1805-1820 MHz||30||41||1.14||20.3||0.56||18|
|TRUE||1725-1740 MHz/1820-1835 MHz||30||39.8||1.10||19.7||0.55||18|
Another interesting aspect about the 900 MHz auction is that the local ISP Jasmine secured one of the licenses to enter the mobile services market which already stands at 146% penetration rate. While competitors have on the order between 10 – 14k sites to provide service, Jasmine will be hard-pressed to build even more if they are to compete on performance because of their limited channel allocation. This is a challenging task given the Thai regulatory framework on infrastructure. A retail business model will be challenging which brings into the spotlight alternative business models to pursue given the competitive disadvantage in spectrum holdings and market lifecycle. There are answers to this riddle which Jasmine can try, but in the meantime, the market has not been kind to the Thai telecom sector: shares of all operators have taken a dip with the winners Jasmine and True stock dropping 16.3% and 8.2%, respectively, following the release of results and shares of AIS and TAC losing 10.3% and 14.5%, respectively.