Shares in Thailand’s top telecoms companies participating in the second auction for 4G spectrum licences fell sharply on Wednesday due to concerns that a fierce contest that pushed up bidding prices will hurt their profits.
The National Broadcasting and Telecommunications Commission (NBTC) continued bids for two licences of 900MHz frequency for second day with the latest prices touching 72.09 billion baht ($2.00 billion), or 36.05 billion baht per licence, NBTC said.
The base price was at 12.86 billion baht.
Costly bids mean Thai telecoms companies’ financial position could be weakened as debt position rises, which will raise risk to profit and dividend payout, analysts said.
At midday break, market leader Advanced Info Service , which surged 10 percent on Tuesday, declined 4.65 percent to 205 baht, while second-ranked Total Access Communication lost 5 percent after a 17 percent jump in the previous session.
Settapong Malisuwan, vice chairman of NBTC, said higher bids were mainly because the regulator had offered more flexible payment terms, which allow bidders to pay a majority of the bidding price in the fourth year after receiving a licence.
Unlike the first auction, companies are required to pay only 50 percent of 16.08 billion baht, the bandwidth value, in the first year, with the rest to be paid in the second and third year, the regulator said.
AIS and True, which won in November auction, have to pay 50 percent of bidding prices within 90 days and another 25 percent each in the second and third year.
“Winners in November should not want to see rivals to have lower costs than them and that’s why they keep bidding,” said Pisut Ngamvijitvong, an analyst at CIMB.
AIS, part owned by Singapore Telecommunications Ltd , needs a new licence to expand coverage after it lags behind rivals on 4G services, while TAC wants a licence to reduce its costs and stop True from gaining market share.
True, controlled by billionaire Dhanin Chearavanont’s Charoen Pokphand Group, may not need the 900MHz licence, given it has enough bandwidth to offer 4G services, but it is bidding to prevent Jasmine from entering the market, Pisut said.
Jasmine needs a mobile licence to help strengthen its broadband business, which will be replaced by 4G technology, some analysts said.
($1 = 35.9600 baht) (Additional reporting by Aukkarapon Niyomyat and Amy Sawitta Lefevre; Editing by Gopakumar Warrier)