TOT delays second-phase 3G expansion to 2014

TOT has put off the second phase 3G expansion until 2014 | Image: Yozzo

The second phase of TOT’s 3G 2100 MHz network expansion has been put off until 2014, as the state-run telecom provider can’t decide on its partnership models.

TOT needs to amend the MVNO contract with SIM, the handset and 3G service arm of Samart Corporation, after the Office of the Auditor-General in October 2013 suggested the contract placed TOT at a major disadvantage. The contract would provide Samart SIM with 54% of revenue against 46% to TOT on a 12-year contract.

TOT is also considering a partnership model with Advanced Wireless Network (AWN), the 3G subsidiary of mobile operator Advanced Info Service (AIS). who offered a 3G service under a wholesale-retail contract similar to a partnership deal between the other state-run operator CAT Telecom and True Corporation.

AIS, the country’s biggest mobile operator, has already transferred some 15,000 mobile towers and base stations to TOT with the concession set to expire in 2015.

TOT and AIS at first agreed to enter a 3G network partnership contract. AIS could transfer the right to manage and maintain networks under a concession with TOT. The state enterprise would then rent the private firm’s infrastructure to provide service. TOT could manage the network itself or let a private firm like AIS do so.

But AIS recently asked TOT to reserve its right to reclaim all telecom networks it had transferred to the state enterprise, saying the company wanted to follow the lead of True Corporation if the latter got approval to start an infrastructure fund.

Second-phase: 13,000 to 15,000 base stations and 4G

Today, TOT has 5,320 3G base stations and plans an additional 13,000 to 15,000 base stations under a second phase 3G expansion through a partnership deal.

One key point of the contract with SAMART’s SIM is that TOT must provide download speeds of at least 42 Mbps to SIM, however – TOT has only 1,000 base stations out of the 5,320 with the capacity to deliver 42 Mbps. This will force TOT to upgrade its existing 3G network from the first phase to comply with the new contract and could take at least 10 megahertz in bandwidth to upgrade.

TOT has only 15 MHz of bandwidth on the 2100-MHz spectrum for providing 3G and eventually 4G. If TOT upgrades its network, the state enterprise will have only 5 MHz of bandwidth left, insufficient for 4G service.

The MVNO’s

SAMART’s MVNO I-Mobile Plus, Mojo 3G and i-Kool are the only MVNO’s left, out of the initial five MVNOs offering 3G service on TOT’s 3G network.

I-Mobile Plus claimed 329,000 active MVNO subscribers end of September 2013, up 64% from end June 2013, however subscriber growth has mainly taken place in 2013, although the MVNO has been active since 2010. Samart Corporation has been busy buying into companies with outlets and service centers to distribute their SIM, while are also providing their SIM’s when selling Samart’s own handset line “I-Mobile”. Analysts have raised the breakeven level of I-Mobile Plus from 400,000 to 600,000 subscribers due to lower ARPU.

Delayed several times

When the five MVNO’s where given a license to operate back in 2010, TOT, had only 548 (3G-2.1 GHz) base-stations ready in Bangkok.

In 2011 only 1,000 base stations was ready for service, installation was delayed several times due to TOT’s slow workflow.

In total TOT was supposed to install 5,200 base-stations during phase 1 and complete the project by early 2012. However the project was finally finished late 2013.

In December 2011 the MVNO 365-3G, filed a complaint against TOT with the National Anti-Corruption Commission, accusing TOT of unfair contracts when it learned that its contract had clauses that gave the larger MVNO a cost advantage over it, in terms of rental capacities.

In September 2013, IE Technology the company behind the MVNO IEC3G cited the lack of network and delay to its shareholders as reason for offloading their MVNO (7,000 subscribers) and was inviting interested parties to bid for IEC3G.

Author: Allan Rasmussen
Managing director at Yozzo. Allan is a MVNA/MVNE/MVNO specialist with hands-on experience from more than 60 projects in both competitive and greenfield markets. His expertise includes business case development, execution, launch and growth strategies. Advisor and consultant to mobile network operators, MVNA, MVNE, MVNO, National Regulatory Authorities, Government Agencies, Broadcast Companies, TMT Industry Associations, Innovation and Investment Banks.
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