On the surface, Thailand presents one of the most appealing MVNO opportunities in APAC. Solid ARPU, low MVNO market presence, 149 percent mobile penetration, and consumers with twice the thirst for data, than the Europeans

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By Allan T. Rasmussen, Managing Director at Yozzo Co., Ltd. | December 2014
On the surface, Thailand presents one of the most appealing
MVNO opportunities in APAC. Solid ARPU, low MVNO market
presence, 149 percent mobile penetration, and consumers with
twice the thirst for data, than the Europeans.
eneath the treetops lures a jungle of un-
resolved legislation issues, insufficient
infrastructure, and poorly designed
MVNO contracts due to lack of experience and
wrong expectations. However a major cleanup is
about to take place.
The market is shared between three mobile
operators. Advanced Info Service (AIS) is the
market leader, with a 47.8 percent market share
(43.8 million subscribers), followed by DTAC
(Telenor) with 28.22 percent and True Move (CP
Group) with 23.39 percent. Up until the issuing
of the country’s first 3G licenses in 2013, the
mobile operators rented capacity under a
concession model from the two state-owned
network operators TOT and CAT Telecom.
In June 2013, AIS, DTAC and True Move launched
commercial 3G 2100 MHz services and just five
months later, 30 percent of the 90 million 2G
customers, had migrated to 3G. With the
introduction of a licensing scheme, state-run
network operators, TOT and CAT Telecom, found
themselves in a situation where they had to find
new revenue streams as service providers to
compensate for the end of their concession
revenue.
The most vital part of the plan was to secure
MVNOs deals, so far - six years later, without
significant success, due to insufficient
infrastructure, internal legacy systems, lack of
experience, unfair and un-attractive packages for
aspiring MVNOs.
The first MVNO’s in Thailand
Five MVNOs where given a license to operate on
the network of TOT in 2009. Today three MVNOs
remain, with only one showing promising signs
(i-Mobile 3G). The two other MVNO’s are Mojo
3G and i-Kool. The latter was until a few months
ago partner for the Malaysian (Celcom) MVNO,
Tune Talk - however, in July 2014, i-Kool
announced that they no longer will be
distributing SIM cards with the Tune Talk logo
and previous Tune Talk SIMs would be converted
to i-Kool SIMs. I-Kool is part of Loxley Public
Company Limited.
Combined, the MVNOs have only manage to gain
420,000 subscribers, since 2009. i-mobile
3G claims 410,000 of those subscribers, of which
315,000 have been gained within the 12-16
months, mainly due to SIMs being handed out
B

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with the purchase of the parent company’s
handsets. There are no information available
regarding the MVNO’s churn rate.
When the five MVNOs where given a license to
operate, TOT, had only 548 (3G 2100 MHz) base-
stations ready in Bangkok. In 2011 only 1,000
base stations was ready for service, installation
was delayed several times due slow execution
from TOT. Today only 5,325 base-stations has
been installed compared to AIS’s 20,500 base
stations.
MVNO's turning to CAT TELECOM
One MVNO, 365 Communication has been ready
to launch on the other state-run operator, CAT
Telecom, for several months but is still waiting,
as CAT does not yet have a billing system in
place for MVNOs. The platform was supposed to
be finished 4 month ago. CAT has claimed they
received interest from several MVNOs although
the state-run telco runs on the 850 MHz
network, which only supports half of the devices
on the market.
This does not seem to affect retail giant Tesco,
who is in negotiations with CAT to open as a
MVNO in Thailand. As part of the agreement,
Tesco has proposed to sell up to 5 million 3G
mobile numbers. Question is, if Tesco can be
satisfied, (or even aware) of only half the market
opportunity, due to the limited device support
for the 850 MHz network. Secondly, if CAT will be
able to provide an extended platform, which has
to supports Tesco’s loyalty program and online
shopping applications.
CAT announced in September that they expected
to approve Tesco as a MVNO however, at the
time of writing no signing has taken place yet.
Question is if CAT has found a suitable platform
solution and by that, I don’t mean the technical
part of a platform, as there are many of those
but more so, if they have the staff with the right
skills and mindset to service a MVNO like Tesco,
or other MVNO’s for that matter.
MVNO True Move
Although CAT Telecom has the operating license
for the 850 MHz frequency band, CAT Telecom
has outsourced the network operations to
"BFKT" a True Group subsidiary without
transferring the spectrum or giving True Group
the right to manage the spectrum on CAT’s
behalf.
BFKT then builds and operates the 3G network
infrastructure and CAT Telecom then leases the
equipment from BFKT. Another of True’s group
divisions "RealMove" then buys 80 percent of the
network capacity to resell under the True Move
H brand = functioning as a mobile virtual
network operator (MVNO) to CAT Telecom.
BFKT has installed the 3G network equipment
using HSPA technology for CAT to wholesale and
retail the service. CAT has retailed the service
under the “My” brand originally with the focus
on corporate customers.
The cleanup
Today CAT and TOT are under pressure from the
government’s new policy to reform the two state
telecom enterprises, and has been asked to
provide a turnaround plan, as both have
struggled since losing their concession revenue,
which had been their main source of income.
TOT has reached out for co-operation with local
Telecom businesses, among the respondents

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was, AIS, True Corp, Samart i-Mobile, Loxley, and
Mobile LTE. The usual players in the local
telecom industry, except for Mobile LTE, which is
a new company, founded October 27
2014. Director of Mobile LTE is Yanyong
Akrajindanon, former Senior Executive Vice
President of Advance Info Service PCL. (AIS).
According to the local English language
newspaper, The Nation, Yanyong Akrajindanon
said that if TOT selected Mobile LTE as its
strategic partner, Mobile LTE would forge a
partnership with partners to help it develop the
business under the new partnership.
The newspaper cited a TOT source saying,
Mobile LTE proposed to collaborate with TOT as
a MVNO, aiming to acquire between 12-15
million subscribers, guaranteeing TOT earning
around THB 2.5 billion per year, for five years
from the MVNO partnership. In addition, Mobile
LTE was also ready to invest in a 4G network for
TOT and offered TOT to hold a 25 percent stake
in the company.
Mobile LTE would be supported by a listed
company, which they declined to name, to raise
funds to develop the business under the
proposed TOT partnership. Neither Mobile LTE,
nor its partners have any prior experiences in
launching or running a successful MVNO
operation, which the subscriber volume aim of
12-15 million underlines.
Thailand’s State Enterprises Policy Commission
or “Superboard” has ordered both TOT and CAT
to terminate unprofitable businesses and focus
on six core areas instead. They are basic
telecommunications infrastructure, telecom
towers, wireless broadband service, fixed-line
broadband, international internet gateways and
submarine cables.
As a curiosum, which underlines the situation,
TOT will close its own 3G operation (TOT3G),
which only managed to only gain 10.000
customers, interesting, considering TOT has
17.000 employees.
TOT is bracing for an operating loss of THB 4.57
billion this year, while CAT expect a net profit of
THB 1 billion on revenue of THB 49.7 billion this
year.
The government plans to create a national
backbone Holding Co to operate the country's
telecommunications infrastructure, as part of its
efforts to promote digital economy. The aim
would be to reduce redundancies in telecom
network investment, which could result in lower
service fees. The “National Backbone Holding Co”
would operate all existing telecommunications
network assets and generate revenue from
providing network rental services.
Two other companies would be set up under the
holding company, “Telecom Tower Co” and
“Fibre-Optic Network Co”. However, setting up a
holding company need some adjusting due to
legal technicalities, as TOT and CAT operates
under a build-transfer-operate (BTO) concession
agreement.
As part of the government’s policy to reform
Thailand, a 4G auction, which was supposed to
have taken place, has been temporarily
suspended, as the government is considering
changes to the Telecom Act, changes that could
end up benefiting the state-run operators. The
government has inquired whether it was
possible simply to assign the 4G licenses to
those committing to provide maximum benefits
to the public, instead of using an auction.

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Highly attractive MVNO market
Thailand remains a highly attractive market with
solid opportunities in various niches due to its
diversity and unique conditions. Both TOT and
CAT Telecom urgently need new revenue
streams and, the most vital part of their turn
around plans is to secure MVNOs on their
network. Blended ARPU is one of the most
attractive in the region at $6.29 per month with
more than 54 percent coming from voice usage.
Thai consumers are twice as data hungry than
their European peers. According to Nokia
Networks Asia North division, Thailand’s mobile
subscribers consume an average of 400 MB of
data per month, while its European peers
consume less than 200 MB.
They spend 3.1 hours of their daily media
routine via their mobile devices (excl. SMS/Call)
and 74 percent prefer their mobile devices for
internet usage verses traditional methods.
Thailand has almost 40 million smartphones, of
which 25 percent are 4G-enabled devices.
Smartphone sales are likely to hit 14 million
units this year in a market worth $3.2 billion,
making the country one of the world's most
attractive smartphone markets.
With a broadband penetration per population of
only 7.96 percent versus a mobile penetration of
149 percent, Thailand is mobile first, and
presents an attractive opportunity for MVNO
entrants with the right wholesale agreement,
market strategy, skillset, and understanding of
the local culture.
Yozzo is a Telecom Consulting firm, specializing in Information and Communications Technology (ICT).
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technical skills. Our clients includes Governments, Telecom Regulators, Telecom operators, MVNO’s, Mobile
device manufacturers, Retailers, Software & Service providers, Media and Broadcasting companies.
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value to your business by identifying and pursuing: growth opportunities create products, services, and
businesses that improve the efficiency, productivity, and profitability of your business.
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