Analysis of Thai’s mobile operators’ strategies - Report

Wireless Infrastructure Deployment & Economics
Homework 2 – Analysis of Thai’s mobile operators’ strategies

This document is public version of the submitted report.
Please contact the author for download / correspondent query.

Author : Laili Aidi

Introduction
This report contains the analysis of 2 Thai’s mobile network operators’ (MNO) strategies,
which are AIS (AIS and DPC) and True (True Move). The first one is the oldest and largest
private MNO, while the second one is the newest player but quickly take position among the
biggest 3 in the market. This report is continuation from [1], which will give the reader a better
overview of the discussed topic below.
The first 2 sections consist of comparison and evaluation of the specific strategies, and then
the conclusion part is presented at the last section. The strategies that are highlighted are network
related strategies, including spectrum strategy and network deployment, and then the business
related strategies, including overview of business landscape, product (branding and traffic plan),
and their customer segmentation.

Part A. Network Related Strategies
Spectrum is among fundamental elements in providing telecom services, and it affects the
way of every MNO runs their business. In Thailand, the telecom services are provided around
band 1800 MHz, 2100 MHz, and 850 MHz and 900 MHz. As the telecom regulation runs under
the BTO concession, thus none of the private MNOs have these bands, as the only owners are the
state telecom companies (CAT Telecom and TOT) that granted the usage of the specific slice to
the private MNOs [2].
Frequency band 850 MHz (GSM-850/CLR) was previously separated into 2x12.5 MHz
chunks, CAT Telekom operated the AMPS-A, and its concession, DTAC, operated the AMPS-B
[9]. As technology changed, CAT Telecom made deal with Hutch to offer CDMA2000 service in
that AMPS-A spectrum (2x10 MHz), while DTAC did not upgrade its network technology. Later,
True, which was the newest MNO at that time, acquired 2x5 MHz spectrum in the middle and
DTAC was pushed to the corner with 2x10 MHz. Moreover, AIS is the only Thai’s MNO that
fully operate in frequency band 900 MHz (E-GSM-900), occupies 2x17.5 MHz under 25-year
BTO contract with TOT since 1990 [3]. True with the other 2 MNOs (Hutch and DTAC) are
squeezed in 2x25 MHz under CAT Telecom concessions. This situation is shown in figure 1.

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Figure 1. GSM-850 and GSM-900 Frequency Band Allocation in Thailand [4]
Moreover, CAT Telecom owns frequency band 1800 MHz (GSM-1800) and granted this to
its concessions: True and DPC (AIS’ subsidiary) get 2x12.6 MHz each from 2x75 MHz resource,
while DTAC has major portion of the spectrum, which is 2x49.6 MHz. Furthermore, in frequency
band 2100 MHz (IMT), Thai Mobile (TOT’s subsidiary) possesses 2x15 MHz from total 2x60
MHz capacity, while the rest 2x45 MHz remains unused, as the 3G auction has been repeatedly
delayed [3]. AIS is the MNO that was hit with the impact of this uncertainty as it is still waiting to
unknown period of time for the auction, due to unsolved political and legal issues. This situation is
shown in figure 2.

Figure 2. GSM-1800 and IMT Frequency Band Allocation in Thailand [4]

From the description above, it can clearly be seen that True (under its subsidiary, True Move)
has made significant achievement toward its network related strategy. It saw opportunity to grab
market by providing first 3G services (trial) in its launching using 850 MHz and 1800 MHz band,
and offered bundling with iPhone 3G [5]. Using this, True has grown rapidly and extensively
expanded its market share to 17.9 million subscribers in Q3 2011 (AIS 44.6%, DTAC 30.9 %,
True 24.5%), makes it as the 3rd largest Thai’s MNO [3][5]. This can be remarked as important
aspect, considering the fact that it just launched full commercial operations in March 2002 [5].
Moreover, AIS is also in good position with its slice in 900 MHz band, and made good move
by offering both GSM900 (country wide) and UMTS900 services with frequency re-framing [3].
The 900 MHz band provides greater coverage radius rather than 2100 MHz band for the same
CAPEX, and also impact to cost effective as only fewer base stations are required [6, 7]. Thus,
these coverage and cost-saving benefits mean AIS can bring its 3G services to less-densely
populated or regional/rural areas where greater distances separate subscriber and base station, that
previously were uneconomical to cover. However, as AIS has large subscriber segments (as
discussed in section B), both in the city and rural area, it is important for them to get the BTO
concession in 2100 MHz band, as this band is best suite in the cities and large town [8]. The other
reason is, it is impossible for them to completely shut down its 2G operation (even in city area),
and DPC only has small chunk to provide 3G service in 1800 MHz band, as well as this band is
still not a viable option for 3G services yet [7].

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In term of network deployment, both AIS and True also have made good movement with its
strategy. True Move prioritizes to build its 3G network in selected international areas, which are
around 2 km radius of most BTS and MRT routes in the BMA, tourist and provincial areas in
Pattaya (Patong Beach), as well as Phuket and Chiang Mai airport [5]. Moreover, AIS prioritizes
their 3G service limited scale in Bangkok shopping malls and some major rural areas [3]. As the
3G network in Thailand is still in early stage, these different choices are beneficial to both of them
to grab specific user segment that is not overlapping each other. However, in term of scalability,
True still only have fewer distribution channel and its coverage still not reach the whole country,
compared to AIS, that has much larger coverage area.

Part B. Business Related Strategies
1. Value Chain
AIS’s businesses run above the enterprise that is supported by its 9 child subsidiaries, while
True Move businesses run together with its other 4 network company [3][5]. This business empire
models are little bit different, but at the end, both of them use that to build products and services
around the concept of “ecosystem”, by synergizing their businesses within each other’s subsidiary
or company network, as discuss later in “Product” section.
Moreover, using the spectrum allocation mentioned above, both AIS and True do almost all
the possible value chain of an MNO. Both of them use third party to run some of the
infrastructure and operation activities, for example AIS use Huawei to provide IN for its pre-paid
mobile service, while True Move uses both Alcatel-Lucent and Huawei both for softswitch
solution, BSC, microwave, etc [8].
They also build large range of choices for retail distribution, portal and reseller. True
separates their distribution channel into 5 models: Wholesale partner, Direct sales, Multi-retailer,
Retail shop (True shops, TrueMove shops and kiosk, TrueLife shops, True Coffee), Retail partner
(Move Up Vans)) [2]. AIS builds its distribution channel into 3 models: Distributors portal
(Telewiz), Electronic channels (Refill On Mobile (ROM), mPAY, GSM eService) and Direct sales
(GSM Smart Shop) [3]. It is reported that 80-90 % are operated through the first 2 channels.

2. Product
As same as what happening in the other telecom ecosystems, these 2 Thai’s MNO also
implement product differentiation, as both of them offer postpaid and prepaid service. AIS has
developed 4 strong brands within those products, which are targeted to specific group that has
substantial market size, while True Move comes with distinctive bundled packages [2][3].
AIS has obvious data toward its large range of tariff plans [3]. The Postpaid service is
branded with “GSM advance” (for workers, urbanities, tech-savvy and quality-oriented
customers), with packaging services: “Smart Mix & Match” with 10 different tariff plans, “NET
SIM” package, “Smart Phone” package, “ BlackBerry” package, “iPhone” package. The Prepaid
service is separated as: “GSM 1800” (for basic voice communication segment) with 2 different
tariff plans, “One-2-Call!” (for teenagers segment) with 24 different tariff plans, and “Sawadee”
(for customer segment in provincial area, first time users, and those who need longer validity dates
at affordable prices) with 3 different tariff plans.
Furthermore, as mentioned before, True Move comes with bundling model [2]. True
implement Converge package models with its other company networks, such as: Mobile payment
services for postpaid (cooperation with True Money), free WiFi access/higher upload speed
service postpaid (cooperation with True Online), etc. It also has unique non-voice products and

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services, such as: voice SMS, remixable ring tones (“IRemix”), ‘‘over-the air’’ top-ups, “Game
SIM” (to online gamers), “Inter SIM” (for frequent international calls customers), first-world
touch SIM using RFID for payments from any mobile phone, Iphone bundle packages (iPhone 3G,
3G S, 4), etc.
From this data, it can clearly be seen that AIS has more competency in dividing the demand
and behavior of its customers into smaller particular segment, by providing wide range of choices
of products and service, while True puts more effort in mass target group. It means, AIS focuses in
price differentiation that seems to be done in order to fulfill specific needs of its large customer
segment. True does not have packaging services as broad as what AIS has, but it is more focus to
business model differentiation, to maintain current customer base and strengthen the service
convergence with its other subsidiary companies.
Moreover, Pricing is also an important aspect to be compared, especially in calling cost, as it
is mostly rated significant in customer perception and influence purchasing decision-making in
specific brand package. True offers the lowest call cost of both pre-paid and post-paid service
within same network, while AIS offer the lowest price from second minute onward for call outside
the network.

3. Customer Segmentation & ARPU
It was reported that True Move has 7.7% postpaid subscribers (Q3 2011), while AIS has
10.8% (Q4 2010) [3][5]. Thus, we can conclude that the overall mobile ARPU of these MNO, and
Thai’s market as overall, is strongly influenced by prepaid customers. The graph in figure 3 below
describes the ARPU of these 3 biggest Thai’s MNOs. Even tough the number of connections
reported by operators does not necessarily equal to the number of subscribers, this data can be
used as indicator of the quality of subscribers and revenue health.

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Figure 3. 3 Biggest Thai’s MNOs ARPU [9]
From this, it can be seen that all of these MNOs suffers with decreasing number of ARPU
over these several years. However, True has the most obvious data, despite the fact that it has done
good movement in acquiring subscribers. It is reportedly, it significantly reduced tariff, which was
made in order to survive during the price war and acquire more subscribers [5]. AIS seem still
performs better in grabbing user, especially in upper segments (corporate and small and medium
(SME)), while True seem graps more subscribers from the low-ARPU segment, and probably low
loyalty too, which will makes this is definitely not healthy in the long term. True seems to trade
off with lowest ARPU because of this, as well as a result of their lowest pricing strategy, and this
ARPU drop significantly in recent years, especially in its Pre-paid subscribers.

Part C. Summary
From the data and discussions mentioned above we see some differences and similarities
among these 2 MNOs’ strategies in running their businesses. Indeed, these strategies, more and
less, also as impact of the telecommunication regulation and the strength of company’s financial
healthiness. AIS, as the oldest private MNO took huge advantage over their great market cap,
large subscriber base, and current position, especially in spectrum allocation. Meanwhile, True, as
the new private MNO and small company compare to its competitor, introduced unpredictable
movements and unique business plan in order to grab customer, which then changed the market
landscape.
However, both of them suffer from saturated market and drop in ARPU, which means they
have to increase operation efficiency, and find new business models in order to survive from tight
competition, especially due to introduction of new technologies and possibly new kind of actors as
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well. Thus, as there are multiple MNOs with overlapping coverage as well as saturated growth in
mobile, the consolidation for the basic mobile coverage can also be an option to be considered,
and focus on presenting new technologies and better services.

Appendix - Reference(s)
[1] Aidi, Laili. Homework 1 – Country Study: Thai’s Telecom Market.
http://www.slideshare.net/lailiaidi/thais-telecom-market-country-study-presentation [Nov. 12,
2011]
[2] True Annual Report 2010 http://www2.truecorp.co.th/en/ir_annual_report.aspx [Nov. 15,
2011]
[3] AIS Annual Report 2010 http://investor.ais.co.th/AricleListAISIRNews.aspx?mid=77 [Nov.
11, 2011]
[4] Thailand's mobile market overview – Spectrum
http://jows.blogspot.com/2010/02/thailands-mobile-market-overview.html [Nov. 11, 2011]
[5] True Q2 Report 2011 http://www2.truecorp.co.th/en/ir_quarterly_results.aspx [Nov. 12,
2011]
[6] New spectrum band for 3G to lead to major increase in coverage
http://www.gsmworld.com/newsroom/press-releases/2065.htm [Nov. 19, 2011]
[7] Spectrum Refarming: Roll-out 3G services on 2G spectrum
http://www.telecomcircle.com/2009/12/spectrum-refarming/ [Nov. 19, 2011]
[8] Universal Mobile Telecommunications System
http://en.wikipedia.org/wiki/Universal_Mobile_Telecommunications_System [Nov. 19, 2011]
[9] Thailand's mobile market overview – ARPU http://jows.blogspot.com/2010/02/thailands-
mobile-market-overview-arpu.html [Nov. 12, 2011]

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