Sunday, November 8, 2009

CALL TO REQUIRE THAI-MADE EQUIPMENT FOR 3G ROLL-OUT

       The national telecom watchdog yesterday was urged to include a requirement in the licence-auction guidelines to use locally made equipment in part of the third-generation network rollout. Former deputy transport minister Pinij Charusombat said otherwise only foreign suppliers would benefit fully from the network investment.
       Pinij made the suggestion during a seminar in Bangkok entitled "3G and the Development of the Thai Capital Market", hosted by the Capital Market Academy.
       He said this would enable local manufacturers to share in the benefits. Otherwise, Thais would gain only 20 per cent of the return from the 3G-network investment, with the rest going to foreign telecom-equipment suppliers. Although one of the banned Thai Rak Thai Party MPs, Pinij is believed to be a de-facto leader of the Puea Pandin Party.
       He said veteran telecom operators should not be allowed to bid for the 3G 2.1-gigahertz licences, but rather only new entrants, which would promote real market competition.
       One of two panellists, National Telecommunications Commission (NTC) commissioner Sethaporn Cusripituck, said the auction for the four 3G licences would spark huge investment. Each of the four winners will spend an estimated Bt50 billion on their network roll-out during the initial phase, thus encouraging investment and creating jobs.
       The other panellist, NTC member Sudharma Yoonaidharma, said the NTC should first finish the main rules regulating the market in the post-3G era before granting the licences.
       But he said the licences should be issued soon, to give telecom operators time to prepare for rolling out their 3G networks before their concessions ended. All private telecom operators' networks belong to their concession owners - TOT and CAT Telecom - under "built-transfer-operate" arrangements.
       Stock Exchange of Thailand president Patareeya Benjapholchai said during the opening of the seminar that the combined market capitalisation of listed telecom firms was about Bt500 billion, accounting for 10.88 per cent of the combined market capitalisation of all listed firms.
       In a separate matter, securities houses yesterday downgraded telecommunications stocks in the face of a possible further delay to the NTC's plan to auction the four 3G licences. During a meeting on Wednesday, economic ministers asked the NTC to consult with the Council of State about whether it had full authority to grant the new spectrum before proceeding with the auction plan. The watchdog agreed to do so.
       The securities houses said the possible delay had affected the attractiveness of shares of three listed telecom operators: Advanced Info Service (AIS), Total Access Communication (DTAC) and True Corp, parent of True Move.
       A Finansa Securities analyst recommended "sell" for True shares and shares remained "buy", thanks to a high dividend yield.
       The analyst said telecommunications operators hoped 3G would drive their earnings growth. Without the licences, their earnings growth would not be as attractive for investors and stakeholders over the next three years.
       An analyst at UOB Kay Hian Securities (Thailand) said that if the 3G-licence auction were postponed by six months to a year, operating costs would be affected. The licences are expected to reduce costs at least 10 per cent.
       The NTC is expected to auction the licences next February. Many parties believe they will pave the way for the telecom concessionaires to migrate customers from the state concessions to the licensees, in order to save on regulatory costs.
       Each of them pays about 25 per cent of their revenue on average as their concession fee, while the annual 3G-licence fee will cost 6.5 per cent of revenue.
       Similar to Finansa, the UOB analyst also recommended "sell" for True shares and "hold" for DTAC but maintained a "buy" recommendation for AIS. AIS< DTAC and True all closed lower yesterday. DTAC declined 4.58 per cent to Bt36.50, AIS 1.17 per cent to Bt84.25 and True 2.79 per cent Bt2.79.

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