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1. Wireless Infrastructure Deployment & Economics
Homework 1 – Country Study: Thai’s Telecom Market
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Author : Laili Aidi
Part A. Telecom market key actors and their characteristics
At present, Thai’s telecom sector is dominated by mobile communications [19]. As of
March 2011, the mobile cellular user reaches 98 million (world rank 13) and the penetration rate
was estimated at 107.86 % over 66.7 million population [1]. In 2009, the Internet host and Internet
users are around 1.335 million (world rank 37) and 17.483 million (world rank 33) respectively
[2]. And the demand of mobile Internet continues to rise due to limited fixed-line and landline
infrastructure. The sections below present the overview of several key players in Thai’s telecom
market and their profile:
a. Telecom Regulator
The Thai’s telecom business is governed by 2 main acts and independent regulatory bodies:
1. National Telecoms Commission (NTC), responsible for Telecoms business (Telecoms Act),
has a policy-making role in formulating a master plan on telecommunications development.
2. National Broadcasting Commission (NBC), responsible for frequency allocation, supervision
of radio and television broadcasting business (Frequency Act).
In December 2010, It is has been planed that NTC and NBC shall form a single independent
regulatory body, National Broadcasting and Telecommunications Committee (NBTC). This body
will regulate the entire telecommunications sector including voice, content, licenses, spectrum
management, supervising network usage and network connection, networks and equipments
standard control, consumer protection, ensuring fair competition, and enforcing the law [19].
However, until now NBTC still has no appointed members yet and it is uncertainty when the
appointment will be made, as until now it is still took care by NTC.
b. Mobile Network Operator (MNO)
There are currently six MNOs in this mobile telecom market, as briefly shown below:
Table 1. Thai’s MNO’s Profile Summary
MNO Shareholder(s) Network Technology Note
Advanced Info • Shin Corporation (43 %) GSM, EDGE,
The 3G service is non-
Service (AIS) • Singtel Strategic UMTS, HSDPA, HSPA+
commercial beta test
[6, 8, 10] Investment (21 %) [10]. (900 and 1800 Mhz)
Total Access
• Telenor Asia (41 %) GSM, EDGE,
Communication The 3G service is non-
• Thai Telco Holdings (15 UMTS, HSDPA, HSPA+
(DTAC) commercial beta test
%) (800 and 1800 Mhz),
[3, 6, 28]
• Brand name “True Move”
True • TelecomAsia (58.2 %) GSM, EDGE,
• 3G services is non-
[6, 8, 17] • Thai NVDR (5.26 %) UMTS, HSDPA, HSPA+
commercial beta test
• Hutchison Whampoa (55 • Brand name “Hutch”
Hutchison CAT %): marketing and service CDMA2000 1x and 3G • 3G services is legally
[9, 14] • CAT Telecom (45 %): CDMA2000 EV-DO commercial service
network operator • The newest player in the
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2. Wireless Infrastructure Deployment & Economics
Homework 1 – Country Study: Thai’s Telecom Market
market
• Brand name “TOT3G”
• Ministry of finance)
• The first mobile 3G
• Ministry of Information
Telecom of operators in Thailand
and Communication UMTS, HSDPA, HSPA+
Thailand (TOT) [8] (officially)
Technology: network
• State-owned telecoms
operator
company
• Brand name “CAT
• Ministry of finance)
CDMA”
• Ministry of Information
CAT Telecom [6, 3G CDMA2000 EV-DO • 3G services is legally
and Communication
8 12] Rev.A commercial service
Technology: network
• State-owned telecoms
operator
company
Moreover, the table 2 below contains the detail data of the 3 biggest MNOs from the
mentioned above, including their total Active Mobile Subscriber, Market share / cap, total
Revenue, and Net profit. From this table, It is clearly can be seen, despite the increasing number
of the Market cap, these MNOs look like will have declination in their Revenue, as the data taken
from Q3/Q2 2011 is still far away from the 2010 Revenue. But they seem to be able to catch the
Net profit, at least, make it close to the last year stage, as in Q2/Q3 2011 these MNOs already
achieve more than half of 2010 Net profit. From this data, it can be concluded that these MNOs
are taking action to enlarge the operating margin through low OPEX and CAPEX.
Table 2. 3 Biggest Thai’s MNOs Financial Summary
True
AIS DTAC
(True Move)
Matrix / [4, 8, 10] [3, 8, 11]
[5, 17, 18]
Operator
Q2/Q3 Q2/Q3 Q2/Q3
2009 2010 2009 2010 2009 2010
2011 2011 2011
Active
32.3 22.9 17.9
Subscriber 28.8 31.2 19.7 21.6 - 17.1
(44%) (30%) (24%)
(Million)
Market Cap
256.5 252.5 371.6 84.7 99.5 159.2 21.7 55.2 58
(Million Baht)
Revenue
103.2 112 62.6 65.7 72.4 39.8 22 21.9 14.9
(Million Baht)
Net profit
17.1 20.6 12.4 6.6 10.9 9.4 1.2 2 1.4
(Million Baht)
c. Mobile Virtual Network Operator (MVNO)
All the MVNOs in Thailand run in incumbent network, TOT [6]: I-Mobile 3GX (Samart I-mobile
plus), I-Kool Real 3G (Loxley), MOJO3G (Mconzult), IEC3G (IEC), and 365 3G (365
Communication).
d. Mobile Phone Company
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3. Wireless Infrastructure Deployment & Economics
Homework 1 – Country Study: Thai’s Telecom Market
There is a mobile phone company from Thailand, called NewTel Corporation, which produces and
distributes the smart phones, running Android OS with brand name Wellcom [18].
e. Mobile Telecom Outsourcing Company
1. Provide distribution services (starter kits, refills vouchers, wholesale and retail outlets): UD,
Happy Online (online distribution for DTAC)
2. Provide operation, maintenance and repair services for infrastructure:
3. Provides the phone card: Telecard Corporation Company Limited, Lenso Phonecard
Company Limited, etc
Part B. Main challenges for the key actors
There are several key challenges in this market, as it has the most complex telecom market
environment as a result of interlocking investment structure, lease-based infrastructure
concessions, and government intervention [7]. Previously in Thai’s telecom business, the
government owned telecom authorities, control all the wavelengths, and use TOT & CAT
Telecom as the ex-gate-keeper of the industry [14]. But, because these 2 companies alone could
not expand their services to meet the demand, the Build-Transfer-Operate (BTO) concessions
were used and granted to private companies (private MNO), as investors of network construction
and service providers [17].
These concessions allow private MNOs and MNO concession providers to share telecom
monopoly benefits by revenue / profit sharing scheme. But, the private MNOs are not allowed to
have its own physical network assets, indeed it must set up agreement with concession MNO
providers for exclusive right to operate, maintain and carry out investment for a given number of
years, and will in turn be paid an agreed fee to its concession MNO providers alliance. This model
actually become core competency and main profit at each of these MNO concession providers. For
example, over half of CAT's revenue comes from its mobile concession contracts with DTAC,
True Move, and Digital Phone Company (DPC, GSM1800 Brand) [17].
Below are the several global key challenges that are faced by the Thai’s telecom
stakeholder, especially the MNOs/MNVOs in relation with the regulation form mentioned above
and the market condition:
1. Uncertainties in regulation and policy
The telecom industry is under transitional period and there are uncertainties on regulation
and supervision. The reform of the Thai telecom sector has led to major changes in the provision
of services (technology and related regulations). After 2006 coup d'état, the government
announced plans to merge TOT with CAT Telecom to operate a 'Telecom Pool' so the new system
will create more competitive environment driving growth. But after the 2008 election, successive
government abandoned this and continued liberalization process. As there is still unclear when the
NBTC will have appointed members, It will be hard to predict the policy and direction in which
the NBTC will regulate the telecom business, as well as the enforcement of legislation and
regulations [10, 11, 17]. This may adversely affect the MNOs/MNVOs’ ability to implement its
strategy or adapt to any changes in market conditions.
Furthermore, the NTC have arranged 4 licenses to operate 3G UMTS/HSDPA networks on
the 2100 MHz spectrum (IMT 2100), but political and laws prevented the auction as CAT
Telecom claimed it does not have authority to hold the auction. The auction was stopped in 2010,
resulting in near guarantee of incumbent domination to exploit 2G services, as only government
owned MNOs are allowed to roll out 3G. Until 3Q11, many MNOs have settled new base stations
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4. Wireless Infrastructure Deployment & Economics
Homework 1 – Country Study: Thai’s Telecom Market
to unlock the limited data capacity in their current 2G network. However the upgrade has been
pending due to this regulatory issue and investment remains. Until the NBTC is formed, it is
unlikely new round of the auction is going to be arranged [10, 11, 17]. Later on, this suspension
order paved way for incumbents to undertake rent extracting activities rather than direct
investment as CAT sold its 3G right to its concessionaire (True Move), while TOT to its MVNOs.
There are also restrictions on foreign ownership in this market. Any breach of these
restrictions may result in licenses revocation / contract termination / render the MNOs/MVNOs
unable to operate its business pursuant [10]. The term “foreigners” is defined to include a public
or private company, in which non-Thai nationals hold more than 49 % of its registered capital, or
in which more than half of its shareholders are non-Thai national. No regulatory body has yet
established a guideline that can be used by MNOs/MVNOs to evaluate or assess the impact of the
enforcement or interpretation of the provisions.
2. Highly competitive & saturated voice market
Thai telecom market is highly competitive, sensitive to price competition, and remains in
stable contest due to saturation in voice market [10, 11, 17]. The drivers that could increase
subscribers are from surging multiple-devices and data-SIM users, growing M-to-M enterprise
market, and organic growth from rural segment. The data services would continue to be the
growth engine, as demand of mobile Internet continued to rise, trend of social networking, and
affordable lower-end smart phone. This handset business would be key to support data services, as
well as applications to accommodate multi-operating systems, and local contents, etc. As the
ARPU is very low, operator has to keep focus on operational efficiency to enlarge the operating
margin through low OPEX and CAPEX. The MNOs/MVNOs may also face increasing
competition from new market entrants, as the regulatory reform to liberalize the market, as well as
the introduction of new technologies or improvement the existing (3G currently is still in early
phase). Thus, the investment, operation, and marketing spending tend to rise, coupled with various
handset campaigns. Failing in investing and predicting the change in market behavior, may
decline the competitiveness and lowering the levels of customer satisfaction.
3. Operation and maintenance failure
Thai telecom market imposes to higher challenge in risk assessment and management
system, for example the natural disasters (Tsunami, H1N1 influenza, floor disaster) that can lead
to reduction in the number of tourists, as well as causing damages to infrastructure in certain areas.
Moreover, currently most of the MNOs corporate with third parties to maintain, operate and repair
their devices, network infrastructure, distribution, etc (see the “Mobile Telecom Outsourcing
Company” section). If these companies are unable to perform its obligations under the agreement,
or in timely and cost-effective manner, or failure / delay in paying the transaction income from
distribution channel, the MNOs may have to bear higher operating costs, decrease the revenues,
speed and quality of the services, loss of customers, etc.
4. Global economic situation
Thai economy has recovered significantly since the effect from 1998 global financial crisis.
But, this market is still affected by other negative factors within/outside the country, such as the
slowdown in the manufacturing, unemployment, political tension, export, and tourism sectors.
These factors have a material adverse effect on consumers’ income, purchasing power, spending
behavior, level of confidence, as well as the mobile phone service industry through reduction in
mobile phone usage and increase risk in mobile phone service fees (post-paid package customers).
Moreover, the principal revenues of the MNOs/MVNOs are denominated in Thai Baht currency,
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5. Wireless Infrastructure Deployment & Economics
Homework 1 – Country Study: Thai’s Telecom Market
but there are parts of their expenditures are denominated in foreign currencies. Thus, significant
fluctuation in rate exchange would lead to financial effect.
Appendix - Reference(s)
[1] CIA the world fact book https://www.cia.gov/library/publications/the-world-
factbook/fields/2150.html#th [Oct. 28, 2011]
[2] CIA the world fact book – Thailand https://www.cia.gov/library/publications/the-world-
factbook/geos/th.html [Oct. 28, 2011]
[3] DTAC TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED SET
http://www.set.or.th/set/factsheet.do?symbol=DTAC&language=en&country=US [Oct. 28,
2011]
[4] ADVANC ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED SET
http://www.set.or.th/set/factsheet.do?symbol=ADVANC&language=en&country=US [Oct.
28, 2011]
[5] TRUE: TRUE CORPORATION PUBLIC COMPANY LIMITED SET
http://www.set.or.th/set/companyhighlight.do?symbol=TRUE&language=en&country=US
[Oct. 28, 2011]
[6] Internet in Thailand http://en.wikipedia.org/wiki/Internet_in_Thailand [Oct. 28, 2011]
[7] True Q2 Report 2011 http://www2.truecorp.co.th/en/ir_quarterly_results.aspx [Oct. 28,
2011]
[8] List of mobile network operators of the Asia Pacific region
http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_the_Asia_Pacific_region
[Oct. 28, 2011]
[9] Hutchison Telecoms International Limited
http://en.wikipedia.org/wiki/Hutchison_Telecommunications_International_Limited [Oct. 28,
2011]
[10] AIS Annual Report 2010 http://investor.ais.co.th/AricleListAISIRNews.aspx?mid=77 [Oct.
29, 2011]
[11] DTAC Annual Report 2010 http://dtac.listedcompany.com/misc/ar/ar2010_en.pdf [Oct. 29,
2011]
[12] CAT CDMA http://www.cattelecom.com/site/en/list_service.php?cat=588&subcat=756 [Oct.
29, 2011]
[13] CAT Telecom http://en.wikipedia.org/wiki/Communications_Authority_of_Thailand [Oct.
29, 2011]
[14] Thailand Telecommunication Key Players http://www.moit.gov.il/NR/exeres/85869D99-
3A52-4A3A-AE14-2A488A5CE50B.htm [Oct. 30, 2011]
[15] TOT (Thailand) http://en.wikipedia.org/wiki/TOT_(Thailand) [Oct. 30, 2011]
[16] Telecoms in Thailand http://en.wikipedia.org/wiki/Telecommunications_in_Thailand [Oct.
30, 2011]
[17] True Annual Report 2010 http://www2.truecorp.co.th/stocks/extra/4909_110315111341.pdf
[Oct. 30, 2011]
[18] Wellcom http://en.wikipedia.org/wiki/Wellcom [Oct. 30, 2011]
[19] 2008 Telecommunications sector
http://siteresources.worldbank.org/INTTHAILAND/Resources/333200-
1177475763598/3714275-1234408023295/5826366-1234408105311/chapter4-
telecommunication-sector.pdf [Nov. 3, 2011]
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