Beneath the treetops lures a jungle of un-resolved legislation issues, insufficient infrastructure, and poorly designed MVNO contracts due to lack of experience and wrong expectations. However a major cleanup is about to take place.

The market is shared between three mobile operators. Advanced Info Service (AIS) is the market leader, with a 47.8 percent market share (43.8 million subscribers), followed by DTAC (Telenor) with 28.22 percent and True Move (CP Group) with 23.39 percent. Up until the issuing of the country’s first 3G licenses in 2013, the mobile operators rented capacity under a concession model from the two state-owned network operators TOT and CAT Telecom.

In June 2013, AIS, DTAC and True Move launched commercial 3G 2100 MHz services and just five months later, 30% of the 90 million 2G customers, had migrated to 3G. With the introduction of a licensing scheme, state-run network operators, TOT and CAT Telecom, found themselves in a situation where they had to find new revenue streams as service providers to compensate for the end of their concession revenue.

The most vital part of the plan was to secure MVNOs deals, so far – six years later, without significant success, due to insufficient infrastructure, internal legacy systems, lack of experience, unfair and un-attractive packages for aspiring MVNOs.

The first MVNO’s in Thailand

Five MVNOs where given a license to operate on the network of TOT in 2009. Today three MVNOs remain, with only one showing promising signs (i-Mobile 3G). The two other MVNO’s are Mojo 3G and i-Kool. The latter was until a few months ago partner for the Malaysian (Celcom) MVNO, Tune Talk – however, in July 2014, i-Kool announced that they no longer will be distributing SIM cards with the Tune Talk logo and previous Tune Talk SIMs would be converted to i-Kool SIMs. I-Kool is part of Loxley Public Company Limited.

Combined, the MVNOs have only manage to gain 420,000 subscribers, since 2009. i-mobile 3G claims 410,000 of those subscribers, of which 315,000 have been gained within the 12-16 months, mainly due to SIMs being handed out with the purchase of the parent company’s handsets. There are no information available regarding the MVNO’s churn rate.

When the first MVNOs where given a license to operate, TOT, had only 548 (3G 2100 MHz) base-stations ready in Bangkok. In 2011 only 1,000 base stations was ready for service, installation was delayed several times due slow execution from TOT. Today only 5,325 base-stations has been installed compared to AIS’s 20,500 base stations.

MVNO’s turning to CAT Telecom

One MVNO, 365 Communication has been ready to launch on the other state-run operator, CAT Telecom, for several months but is still waiting, as CAT does not yet have a billing system in place for MVNOs. The platform was supposed to be finished 4 month ago. CAT has claimed they received interest from several MVNOs although the state-run telco runs on the 850 MHz network, which only supports half of the devices on the market.

This does not seem to affect retail giant Tesco, who is in negotiations with CAT to open Tesco Mobile as a MVNO in Thailand. As part of the agreement, Tesco has proposed to sell up to 5 million 3G mobile numbers. Question is, if Tesco can be satisfied, (or even aware) of only half the market opportunity, due to the limited device support for the 850 MHz network. Secondly, if CAT will be able to provide an extended platform, which has to supports Tesco’s loyalty program and online shopping applications.

CAT announced in September that they expected to approve Tesco as a MVNO however, at the time of writing no signing has taken place yet. Question is if CAT has found a suitable platform solution and by that, I don’t mean the technical part of a platform, as there are many of those but more so, if they have the staff with the right skills and mindset to service a MVNO like Tesco, or other MVNO’s for that matter.

MVNO TrueMove

Although CAT Telecom has the operating license for the 850 MHz frequency band, CAT Telecom has outsourced the network operations to “BFKT” a True Group subsidiary without transferring the spectrum or giving True Group the right to manage the spectrum on CAT’s behalf.

BFKT then builds and operates the 3G network infrastructure and CAT Telecom then leases the equipment from BFKT. Another of True’s group divisions “RealMove” then buys 80 percent of the network capacity to resell under the True Move H brand = functioning as a mobile virtual network operator (MVNO) to CAT Telecom.

BFKT has installed the 3G network equipment using HSPA technology for CAT to wholesale and retail the service. CAT has retailed the service under the “My” brand originally with the focus on corporate customers.

The cleanup

Today CAT and TOT are under pressure from the government’s new policy to reform the two state telecom enterprises, and has been asked to provide a turnaround plan, as both have struggled since losing their concession revenue, which had been their main source of income.

TOT has reached out for co-operation with local Telecom businesses, among the respondents was, AIS, True Corp, Samart i-Mobile, Loxley, Mobile LTE and One Development.

The usual players in the local telecom industry, except for Mobile LTE, which is a new company, founded October 27 2014. Director of Mobile LTE is Yanyong Akrajindanon, former Senior Executive Vice President of Advance Info Service PCL. (AIS).

According to the local English language newspaper, The Nation, Yanyong Akrajindanon said that if TOT selected Mobile LTE as its strategic partner, Mobile LTE would forge a partnership with partners to help it develop the business under the new partnership.

The newspaper cited a TOT source saying, Mobile LTE proposed to collaborate with TOT as a MVNO, aiming to acquire between 12-15 million subscribers, guaranteeing TOT earning around THB 2.5 billion per year, for five years from the MVNO partnership. In addition, Mobile LTE was also ready to invest in a 4G network for TOT and offered TOT to hold a 25 percent stake in the company.

Mobile LTE would be supported by a listed company, which they declined to name, to raise funds to develop the business under the proposed TOT partnership. Neither Mobile LTE, nor its partners have any prior experiences in launching or running a successful MVNO operation, which the subscriber volume aim of 12-15 million underlines.

Thailand’s State Enterprises Policy Commission or “Superboard” has ordered both TOT and CAT to terminate unprofitable businesses and focus on six core areas instead. They are basic telecommunications infrastructure, telecom towers, wireless broadband service, fixed-line broadband, international internet gateways and submarine cables.

As a curiosum, which underlines the situation, TOT will close its own 3G operation (TOT3G), which only managed to obtain 10.000 customers, interesting considering TOT has 17.000 employees.

TOT is bracing for an operating loss of THB 4.57 billion this year, while CAT expect a net profit of THB 1 billion on revenue of THB 49.7 billion this year.

The government plans to create a national backbone Holding Co to operate the country’s telecommunications infrastructure, as part of its efforts to promote digital economy. The aim would be to reduce redundancies in telecom network investment, which could result in lower service fees. The “National Backbone Holding Co” would operate all existing telecommunications network assets and generate revenue from providing network rental services.

Two other companies would be set up under the holding company, “Telecom Tower Co” and “Fibre-Optic Network Co”. However, setting up a holding company need some adjusting due to legal technicalities, as TOT and CAT operates under a build-transfer-operate (BTO) concession agreement.

As part of the government’s policy to reform Thailand, a 4G auction, which was supposed to have taken place, has been temporarily suspended, as the government is considering changes to the Telecom Act, changes that could end up benefiting the state-run operators. The government has inquired whether it was possible simply to assign the 4G licenses to those committing to provide maximum benefits to the public, instead of using an auction.

Highly attractive MVNO market

Thailand remains a highly attractive market with solid opportunities in various niches due to its diversity and unique conditions. Both TOT and CAT Telecom urgently need new revenue streams and, the most vital part of their turn around plans is to secure MVNOs on their network. Blended ARPU is one of the most attractive in the region at $6.29 per month with more than 54 percent coming from voice usage.

Thai consumers are twice as data hungry than their European peers. According to Nokia Networks Asia North division, Thailand’s mobile subscribers consume an average of 400 MB of data per month, while its European peers consume less than 200 MB.

They spend 3.1 hours of their daily media routine via their mobile devices (excl. SMS/Call) and 74 percent prefer their mobile devices for internet usage versus traditional methods.

Thailand has almost 40 million smartphones, of which 25 percent are 4G-enabled devices. Smartphone sales are likely to hit 14 million units this year in a market worth $3.2 billion, making the country one of the world’s most attractive smartphone markets.

With a broadband penetration per population of only 7.96% versus a mobile penetration of 149%, Thailand is mobile first, and presents an attractive opportunity for MVNO entrants with the right wholesale agreement, market strategy, skillset, and understanding of the local culture.

MVNO Licenses in Thailand as of 2014

Thailand’s Mobile Market Information Q4 2014