National Telecom’s (NT) plan to develop a service on the 700-megahertz band is expected to improve the state enterprise’s service capacity, generate future revenue stream and reinforce the spectrum portfolio of its partner Advanced Info Service (AIS).
The cabinet recently approved NT starting project development of 4G and 5G service on the spectrum with a budget of 61.6 billion baht.
NT is the result of a merger between TOT and CAT Telecom. Before the merger, CAT Telecom won 20MHz of bandwidth on the 700MHz spectrum for upload and download at the 2020 auction. The licence term is for 15 years.
NT has yet to develop a service on the band.
According to NT president Col Sanphachai Huvanandana, the project took a while to launch as it required approval from the NT board, the National Economic and Social Development Council and the cabinet.
The NT board has granted AIS a partnership deal to develop the 700MHz service project with TOT. The companies have signed a memorandum of understanding on the partnership.
“The project will bring benefits to both partners and become an alternative 5G service on the 700MHz band in the market,” Col Sanphachai said.
WIN-WIN SOLUTION
Through the partnership, AIS plans to buy and operate half of NT’s 700MHz spectrum capacity or 10MHz of bandwidth. AIS will pay half of NT’s 700MHz licence fee to the telecom regulator until the end of the licence term on behalf of NT.
In turn, NT will rent and pay rental fees to AIS’s cellular network and related equipment which NT will use to provide its own 5G service on its remaining 10MHz bandwidth of the spectrum.
AIS will also support NT’s 5G service through their network collaboration in the future.
The partnership helps reduce NT’s 700MHz licence fee, although NT will have to pay the network rental fee to AIS until the end of the spectrum licence’s term.
AIS will also be able to utilise NT’s 700MHz range to complement its own 30MHz bandwidth of the 700MHz band.
AIS chief executive Somchai Lertsutiwong said AIS would invest in the expansion of the company’s 700MHz network to serve the partnership.
NT will invest in some related equipment by itself on its core network, especially the network operating system.
Mr Somchai said the 700MHz project would help boost the capacities of both partners in the long term.
AIS holds 30MHz of bandwidth of the 700MHz spectrum band, while its rivals True and Total Access Communication (DTAC) each hold 20MHz.
True and DTAC have already merged into a single company called True Corporation. The merger holds a combined 40MHz of bandwidth on the 700MHz spectrum.
Mr Somchai said NT and AIS may discuss further cooperation in the future, such as network roaming when AIS might have to utilise more of NT’s 700MHz spectrum.
SURVIVAL AFTER 2025
Pisut Ngamvijitvong, senior equity research analyst at Kasikorn Securities (KS), said several existing agreements between NT and telecom operators have generated 15 billion in revenue per year to NT involving the usage fee of spectrum capacity, rental fee for signal roaming and telecom cell sites.
During its status as TOT, it partnered with AIS for TOT’s 2100MHz service and partnered with DTAC on its 2300MHz spectrum. NT’s right to use these two spectrum ranges will expire in 2025.
CAT Telecom partnered with True Move H Universal Communication (TUC) on CAT’s 850MHz range and NT’s right to use the spectrum will end in 2025.
After 2025, NT will hold only telecom assets, including telecom towers and will operate on some spectrum ranges, such as 700MHz and 26GHz it won from the licence auction in 2020. The revenue stream of around 15 billion baht per year will come to an end.
Mr Pisut said the 700MHz project would serve as NT’s new revenue stream after 2025.
According to the cabinet approval of NT’s 700MHz service development project, the 61 billion budget is divided into investment of 30 billion baht, of which around 20 billion baht is the cost of a 700MHz spectrum licence, 9.3 billion baht the cost of network procurement with partners and 718 million baht the cost of the network’s equipment.
The remaining 31 billion is for operating expenses, of which 29 billion baht is for network operation, 1.6 billion baht personnel cost, and 175 million baht other related expenses.
The 700MHz service will serve the state enterprise’s existing customers, who are currently using its 850MHz, 2100MHz and 2300MHz frequencies.
