Concise overview of Thailand's 'complex' telecom industry

It's one of the world's few markets without public 3G. Its mobile industry combines government-owned and privately-held companies.

It's one of the world's few markets without public 3G. Its mobile industry combines government-owned and privately-held companies. And yet, despite the confusion and chaos, mobile is huge in Thailand.

Device penetration is above 100 percent (which, though not accurate of "active" handsets, does indicates huge market demand) and mobile data services--including social networking--is showing huge potential.

To summarize the market is not easy, though, a great overview of the Thai telecom industry can be found in the preface to a report from Research & Markets extracted below:

This report looks at the major operators in the strong Thai mobile market.

In what is a complex commercial environment we find a mix of state-owned companies and private operators functioning under a wide variety of corporate and regulatory structures and interfaces.

There are three major fixed-line operator: one government-owned and two private. Despite the effort put into this segment of the market, fixed-line services are outnumbered by mobile phone services by a ratio of more than 10 to 1.

Nonetheless, with a teledensity of 10 percent in 2010, fixed-line services remain an integral part of the telecommunications environment in the country.

Efforts by the Ministry of Information and Communications Technology to promote DSL broadband services, which it initiated in 2004, was to see the start of a potentially enhanced role for the copper network.

While reasonably good infrastructure has been put in place to support data communication services, this segment of the market only began to experience significant growth during 2006/07 and coming into 2010 broadband internet penetration was still only around 4 percent.

In the meantime the mobile segment of the market continues to grow strongly, although not quite at the heady growth rates experienced a few years back.

When two new mobile players--TA Orange (later to become True move) and Hutchison CAT--entered the market to challenge the entrenched duopoly of Advanced Info Service and Total Access Communications, competition became increasingly vigorous.

Two other operators, Thai Mobile and CAT Mobile, also entered the market in a confusing fashion and without causing much impact. By contrast, True Move had grabbed close to 24 percent of total subscribers by 2010.

The local mobile sector has seen a sustained period of high competition involving heavy price-cutting as the battle for market share raged. There was likely to be a push for consolidation, especially as the market gets closer to saturation.

The government's sectoral reform, once finalized, should also have a major impact on the shape and direction of the market. The matter of the government issuing 3G licences had become a prolonged saga causing much angst in the local industry--but the end was in sight.

A couple of items that go unmentioned in this report, but are nonetheless of huge significance, include corruption and the already negotiated 3G deals.

Corruption remains endemic of the Thai mobile industry, although it is impossible to put a finite figure or sum up the total influence that such dealings may have had.

Whether one refers to Shincorp deal which saw then Prime Minister Thaksin Shinawatra profit from a sale with capital gains tax exemption, or the recent deals which saw both state-owned carriers agree to sub-lease their mobile networks for provide 3G despite the fact that the licensing process is incomplete.

These 3G deals, from which CAT and TOT both stand to make consider income--both in cash flow and technology upgrades--can effectively render the 3G auctions obsolete by providing third-generation mobile technology from the result of deals, and an auction, as opposed to the long running 3G process.

That aside, the report neatly sums up the unique telecom industry in Thailand.


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