2011 Thailand - Telecoms, Mobile, Broadband and Forecasts

As Thailand’s political problems continue, the government is still struggling to issue 3G licences

After almost a decade of strong growth in its telecom sector, Thailand was hit by a serious economic downturn in 2009 as a consequence of the global financial crisis. At the same time the country’s ongoing political problems were having a negative impact on the national economy with a significant downturn in investment being a major concern.

Not surprisingly there was a cooling in demand for mobile services in 2009 through 2010 and into 2011. In the meantime, mobile penetration had managed to pass the 100% penetration mark. Growth in the mobile market looked to be picking up again in 2011, although there would be no return to the boom years. Fixed-line development was virtually non-existent, despite the government’s keenness in promoting this. There had been some interesting activity in the broadband internet market; but this was essentially high growth off a relatively small base. The good news was that the surge in broadband that started back in 2007 was continuing into 2011.

In the wider telecom sector, there was a feeling that a loss of direction was creeping into the market. If any one thing characterises the Thai telecom industry it is probably the stop-start approach to sector reform and re-regulation. An important step was taken when a new Telecommunications Act was enacted a decade ago, but the government moved slowly on the implementation of this legislation.

Most critically it was not until 2004 that the National Telecommunications Commission was finally set up and working. Some good work was subsequently done in the regulatory area; but the industry continues to be frustrated by delays in reform; the uncertainty that these delays create has been the big concern. The National Telecommunications Commission has been trying hard for many years but the regulatory environment has not had a sustained period of consistent policy since the commission was established. In the meantime, one of the urgently needed reforms, the long-awaited restructuring of the two state-owned operators, TOT and CAT Telecom, continued to be postponed. This meant that the critical task of concession conversion also continued to be unresolved.

By 2011 the National Telecommunications Commission was effectively a ‘lame duck’ regulator with the government finally moving to create the National Broadcasting and Telecommunications Commission. Although this new authority was not likely to be operational until late 2011 and would take time to ‘get up to speed’ the National Telecommunications Commission was finding it increasingly more difficult to carry out its role.

The biggest setback was the failure of the National Telecommunications Commission to hold the 3G auctions and to issue these long-awaited licences. The situation with respect to 3G was proving to be a national embarrassment for Thailand. There were also serious concerns in some quarters that the new regulator when finally installed would not be a truly independent authority. In any event one effect of all this was that foreign investors were remaining cautious about the Thai telecom market.

Market highlights:

• Thailand’s mobile market had reached 72 million subscribers by early 2011, for an overall penetration of 105%.
• After more than eight straight years of strong growth, the annual increase in the mobile subscriber numbers had eased substantially in 2009/10 as the national economy slowed.
• Modest mobile subscriber growth of around 9% was expected in 2011.
• The efforts by the NTC to issue 3G mobile licences continued to encounter roadblocks; at the start of 2011 it was anticipated that the process would take at least another twelve months to conclude.
• The broadband internet market in Thailand saw another two years of stronger subscriber growth in 2009/10, expansion running at an annual rate of around 30%; all the signs were suggesting that broadband growth would continue.
• Whilst demand for broadband services was finally certainly increasing in Thailand, it was happening from a relatively small base with overall broadband penetration still remaining low (at just over 4% by end-2010).
• The fixed-line market was showing no signs of revival, with growth close to zero; this has been despite a suggestion that the demand for broadband services would provide a fresh momentum in the copper network.
• Whilst the Thailand’s telecom regulator move to reform the internet segment, most notably opening up the internet gateway market, has indeed been positive, much more restructuring needs to be done; progress in this regard was likely to stall whilst the setting up of the proposed new regulator takes place.

Thailand: - key telecom parameters – 2010 - 2011

(Source: BuddeComm)

Note: ¹Estimates for both 2010 and 2011.

Data in this report is the latest available at the time of preparation and may not be for the current year.