Thai operators begin WCDMA network rollouts... at last - WCDMA/HSPA connections to surpass 12M by 2012; accounting for 14% of total

After numerous delays in issuing licenses and importing equipment, Thailand's mobile operators are set to launch the country's first widespread commercial WCDMA (and HSPA) networks in the first quarter of next year.

To date, only market-leader Advanced Info Service (AIS) has a high-speed network up and running, though this has been limited to a 900MHz deployment in the northern province of Chiang Mai, which has been operational since May. However, it plans to switch on high-speed networks in Bangkok, Thailand's capital, and several other cities at the beginning of next year. Its two main rivals, DTAC and True Move, have both announced similar plans, each pledging to invest THB5 billion (US$148 million) in their respective networks, though DTAC's new CEO Tore Johnsen has recently hinted that its network could be delayed until the latter half of next year. Meanwhile, a new player has emerged in the shape of state-owned enterprise, TOT, which earlier this year took control of the ailing GSM operator Thai Mobile. The debt ridden operator's WCDMA spectrum was considered its most valuable asset. TOT subsequently got the go-ahead from the Thai government to invest THB29 billion (US$860 million) in building-out its WCDMA network with the aim of launching commercial operations next year, and has set a target of 4 million connections within five years.

However, licenses in 2100MHz - the traditional WCDMA spectrum band - are not expected to be awarded until the second quarter of next year. The lack of these spectrum licenses has been a principal reason behind the slow rollout of high-speed networks in the country to date. Instead, current deployments are being realised via the re- farming of existing spectrum in the 900MHz and 850MHz bands, or 1900MHz in the case of TOT.

With all four WCDMA operators rolling out networks during 2009, we predict that WCDMA and HSPA connections will register triple-digit growth over the next four years reaching 12.3 million connections by the end of 2012. By this stage, WCDMA and HSPA connections will account for over 14% of all Thai connections and will contribute to the first decline in GSM connections, which we forecast will fall by around 5% in the final quarter of 2012. All four WCDMA operators should contribute to growth with market shares remaining broadly similar to today.

The belated migration to high-speed networks will be crucial for the Thai operators in maintaining revenue growth in a country that is rapidly approaching 100% market penetration and is one of the most highly-penetrated markets in the Asia-Pacific region. By the end of 2012, we predict that penetration will be approaching 130% while total annual connections growth will have slowed from around 18% in 2008 to just 4%.

Joss Gillet, Senior Analyst, GSMA Intelligence:

It is going to be fascinating to follow the adoption of high- speed services in Thailand. How are all four operators going to differentiate their offers? How are they going to manage the migration from GSM to WCDMA in a market that is rapidly approaching 100% penetration? In a market that is 90% prepaid, WCDMA and HSPA compatible devices will probably still range in mid to high price tiers next year at launch, and adoption of USB dongles will depend on consumer experience, international roaming pricing and effective download speeds. As a comparison, Telstra in Australia is one of the most pro-active mobile operators to recently migrate its installed base to WCDMA HSPA. At the end of June 2008, Telstra was reporting that ‘Wireless Broadband’ connections, USB dongles and data cards, had reached 588,000 since launch in 2006, growing at an average of 20,000 a month. If only moderate growth is possible in a developed market such as Australia - despite nationwide network coverage - then many of the predictions by the Thai operators seem overly optimistic. TOT, for example, is targeting 4 million high-speed connections in five years but currently only has 1% of the market and will be competing against three well-established operators. The large proportion of prepaid connections will not facilitate fast adoption and only a limited number of multimedia devices at launch will provide rich Internet-based consumer experience at an affordable price for prepaid users.