Thailand’s Mobile Market Landscape

General Information Among all the traditional mediums, mobile is most used in Thailand and one of the

fastest growing in Asia. [Key Data. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 1. 27 May 2008]

Subscribers and Penetration

As of 2010, Thailand has 68.75 million mobile subscribers in total, or a 105.6% penetration rate.

However, according to NTC, there are 98 million mobile handsets in use, or about

42.55% increased. It can be said that almost a half of subscribers carry more than 1 handsets.

There are now 7 mobile operators .

• AIS • DTAC • True Move • Hutch • CAT CDMA • Thai Mobile 1900 • TOT3G (i-mobile3GX, IEC3G, i-kool3G, 365)

List of Operators

Rank Operator Technology Subscribers Ownership (in millions)

1 AIS GSM, EDGE 30.5[98] (3Q 2010)

Shin Corporation(42.67%) UMTS, HSDPA (limited) Singapore

Telecommunications(21.34%) Free Float(35.99%)

2 DTAC GSM, EDGE 20.90[99] (3Q 2010)

Telenor (65.5%) UMTS, HSDPA (testing)

3 True Move GSM, EDGE 15.8[100] (4Q 2009)

True Corporation UMTS, HSDPA (Nationwide in 2 years)

4 Hutch CdmaOne 1.041[101] (March 2009)

True Corporation CDMA2000 EV-DO

5 TOT 3G UMTS, HSDPA Not Yet Available TOT (100%) 6 WEPCT PHS Not Yet Available True Corporation 7 CAT CDMA CdmaOne Not Yet Available CAT Telecom

CDMA2000 EV-DO Rev.A

Top Contents

• According to AIS, music, news, games and other entertainment contents are favorite to the customers.

• Expected VAS revenue of 2011 is 1.4-1.5 billion Baht due to the growth of mobile internet usage.

• Estimated mobile internet hour per user per month is 70 hours/user/month. In 2010, mobile internet usage grows 150% comparing to 2009.

• A growth of revenue is a fruit of a growth of social network . There are 2 millions Facebook users and possible to reach 8 millions in 2011.

• AIS has now more than 7 millions subscribers using VAS. • Strategic VAS partners are GMM (music), RS (music), Samart (entertainment),

INN (news), and Mono Technology (entertainments).

http://www.ryt9.com/s/nnd/1048431

3G Mobile Only an estimated 1.3%of the mobile phone population subscribe to 3G

phones. In fact, Economist Intelligence Unit has described the infrastructure in Thailand as being poor and expensive to maintain and build upon. The Thailand Government has recognized 3G as playing an important role in connectivity, especially when mobile phones will be used for high bandwidth intensive applications. To step up the effort, the government has awarded 3G licenses to some operators. Also, it has set aside $200 million USD for smaller companies providing 3G services. The next step is to set up Wimax areas to increase data transferred and connectivity.

3G Mobile [Thailand Telecommunications Report Q3 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 17. 27 May 2008.] [EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2007. 1. 27 May 2008

http://site.securities.com.libproxy.smu.edu.sg/doc.html?pc=TH&doc_id=158143186 ] [EIU Business - Industry Overview. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2007. 2. 27 May 2008

http://site.securities.com.libproxy.smu.edu.sg/doc.html?pc=TH&doc_id=140725264 ]

Regulations & Legality Issues The governmental has created regulatory body, National Telecommunications Commission

(NTC) to oversee all mobile telecommunications issues, regulating both telecom and broadcasting. However, there has been some on-going discussion. Not only has the NBC not been formed yet, there is considerable debate if the formation of NBC is beneficial. Some problems experienced as a result of the lack of a regulatory body are:

• Concessions • No scheme in place to deal with interconnection payments between operators • Introduction of an excise tax on operators in lieu of the payments made under the concessions to TOT and CAT • A number of attempts were made from 1995 onwards to introduce a telecommunications law to provide the regulatory framework within which the industry could be liberalized and de-regulated. After a number of delays, the law was enacted in October 2001, and contains the following provisions: • Privatization of State Regulators • Both TOT and CAT to be privatized, thus putting them on a similar footing to other operators. The key features of this provision were: – the two agencies to be made into companies and placed in a new holding company owned by the finance ministry – strategic partners to be offered 25% of shares in the new companies – the general public will be offered 20.1% of shares in the new companies – employees to be allocated 3% to 5% of the shares – the government to retain a maximum of 49.9%.

Regulations & Legality Issues Establishment of a Regulatory Body National Telecommunications Commission (NTC) is to be established with seven

members chosen from 14 nominees by a 17-member selection committee. Numerous problems have been encountered in establishing the NTC. In February 2002, the Administrative Court ruled that the proposed selection process was unconstitutional and thus invalid. In January 2003 the Supreme Administrative Court ruled against an appeal of that decision. The problems stem from the fact that the main telecom players were using their political influence in trying to gain representation on the selection committee, thus to influence the subsequent membership of the NTC.

Foreign Ownership The new telecommunications law, Telecommunications Business Act 2001, stated that the level of foreign ownership of telecom companies cannot exceed 25%. The clause was inserted towards the end of the legislative process, shortly before the bill went to parliament. However, it caused an anomaly since a number of the existing telecom companies were already more than 25% foreign-owned. Criticism of this provision also centered on the fact that such a reduction in foreign ownership is contrary to the spirit of industry de-regulation. Subsequently, the limit was raised to 49%. The current 2006 Act does not prohibit indirect foreign control of Thai telecommunication companies.

Source: The National Telecommunications Commission

Consumer Behavior and Trend The growth of mobile phones has reached a level where most people are expected to

own one. Both the sizes and prices of mobile phones have become more affordable. Hence, in Thailand, people of all status from daily-earning laborers upwards can afford a mobile phone. Daily-earning workers are replacing the use of normal lines with prepaid mobile phones, since they are able to control their expenses more effectively. For consumers, mobile phones serve as both a necessity and a luxury. An interesting research done by Euromonitor showed that mobile phones have led to emerging social problems amongst teenagers. This has driven them to prostitution or drug peddling as means to finance their phone expenses. Small groups of young high-income consumers are also finding new ways to differentiate themselves, with the possession of highly priced mobile phones. The growth of the telecommunications sector, the usage of mobile phones, the increase in international outgoing calls and increased number of national telephones corresponds with the economic development of the nation. In the period between 1990 and 1995, Thailand was halfway through a robust growth era, so the highest increase was seen during this period. For instance, mobile phone users were estimated to have grown 20 times, or 2,000%, during that 5-year period. All other indicators increased by over 100% in the same period, as an indication of the boom at that time.

SWOT Analysis

Strengths The country boasts multiple

operators in fixed, mobile and internet subsectors.

The formation of NTC has brought much-needed regulation to the telecoms market, albeit slowly.

Thailand’s telecoms environment includes such key strategic

investors as SingTel, Telenor and Hutchison.

Weaknesses Ownership of the country’s

leading mobile operator is in limbo, following the controversial sale of Shin (43% stakeholder in

AIS) to Temasek and a subsequent change in government leading to

the sale being put in question. Fixed-line growth is static, with no

signs of recovery, especially as broadband substitution takes

hold.

Opportunities The broadband market is very dynamic

and shows signs of huge growth opportunities. Telcos turn to broadband

businesses, ahead of fixed-line telephony. The integration of services from operators

is likely to lead to content application synergies and closer tie-ups with content providers. The increase in popularity of

non-voice mobile services lead to contract opportunities for vendors.

3G could spark off the revitalization of wireless market, with increasing revenue

from non-voice service. Interconnection fees offer operators relief

to the aggressive price wars of late.

Threats The fixed-line sector is stagnant. Political risk, and confusion over government amendments to the

Foreign Business Act, could put off current efforts.

Competitive Landscape The mobile phone industry was the fastest growing of all indicators, with the

fiercest competition seen within this industry. Advance Info Service (AIS), the ex-Prime Minister’s, Thaksin Shinawatra, business, is the leading company in the mobile phone arena.

The other major players are Dtac, and True Move Telecommunications There have

been volatile changes in the promotions by these companies to win customers, as there is still a high potential in this area in future. The number of mobile telephone users increased from 63,000 in 1990 to reach over 48 million users by 2003, an unbelievable change of almost 760 times.

Competitive Landscape

*Note: TOT has 0.2% share but due to rounding up, it is reflected as 0% in the pie chart Mobile Telephone Services. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 3-9. 27 May 2008] [Regulatory Environment. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 2-7. 27 May 2008] [Telecommunication Industry. Euromoney Institutional Investor Company. ISI Analytics, 2006. 3-8. 27 May 2008]

References

1. EIU Business - Industry Overview. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2007. 2. 27 May 2008 http://site.securities.com.libproxy.smu.edu.sg/doc.html?pc=TH&doc_id=140725264. 2. EIU IndustryWire - Forecast. Euromoney Institutional Investor Company. Economist Intelligence Unit Limited, The, 2007. 1. 27 May 2008 http://site.securities.com.libproxy.smu.edu.sg/doc.html?pc=TH&doc_id=158143186 3. Thailand Telecommunications Report Q3 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 26. 27 May 2008 4. Thailand Telecommunications Report Q3 2007. Business Monitor International. London: Business Monitor International Limited, 2007. 17. 27 May 2008. 5. Regulatory Environment. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 2-7. 27 May 2008. 6. "Thailand: Demographics." Social Media and PR Across Asia. 27 May 2008 http://comm215.wetpaint.com/page/Thailand%3A+Demographics. 7. Telecommunication Industry. Euromoney Institutional Investor Company. ISI Analytics, 2006. 3-8. 27 May 2008. 8. Key Data. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 1. 27 May 2008. 9. Mobile Telephone Services. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 3-9. 27 May 2008 10. Mobile Advertising Campaign Brings Interactive Ads to Phones across Thailand with... 4 June 2008 [11] Heineken engages Thai mobile users, Adverblog. 3 December 2008 [Regulatory Environment. Asia Pacific Telecom. Asia Pacific Telecom Research Ltd, 2007. 2-7. 27 May 2008]