2012 Thailand - Telecoms, Mobile, Broadband and Forecasts

Hope that Thailand’s new regulator will give fresh direction to country’s telecom market

The one single feature that characterises the Thai telecom industry has arguably been the stop-start approach to sector reform and re-regulation. An important step was taken with the Telecommunications Act being adopted as law back in 2000, but over the last decade or so successive governments have moved slowly on its implementation. By 2011 a range of deregulation issues were still crying out to be confronted. One of the big structural reform issues – the defining of the roles and the restructuring of TOT and CAT – was demanding urgent attention. In fairness to the industry regulator at the time, the industry over the years has not seen a sustained period of consistent policy direction from government. The market had been waiting a long time for the creation of the promised new regulator as well as the allocation of 3G spectrum.

Thailand finally got its new regulator, the National Broadcasting and Telecommunications Commission (NBTC), in September 2011. With the appointment of the board members, the new commission was able to start operating in its defined role. The commission’s first half year of operation certainly saw a lot of positive action. And most importantly the 3G licence auction looked set to proceed in late 2012.

Thailand’s mobile market has experienced a slowing of demand since 2009, after a period of sustained strong growth. With some easing in the expansion anticipated anyway as the market passed the 100% penetration milestone, the demand for service has been negatively affected by a major downturn in the Thai economy. Growth had already slowed from a few years earlier as the market’s long run of robust expansion, a run that had started in 2000, was probably coming to a close. As growth in the mobile market began to slow, the operators were hoping that long awaited 3G licences would help stimulate fresh business growth for them.

The Thai internet market is continuing on its growth path of the last number of years. The demand for internet and internet-related services has finally begun to increase as evidenced by the expanding volume of international bandwidth. Recognising that the surge in services has been occurring from a relatively low base, Thailand still has a lot of development work to do to catch up to some of the other countries in the region. The country’s estimated PC penetration rate, for example, was still only around 20% at end-2011 and, although moving rapidly, the development of high-speed access had really only just started. Operators were looking at a variety of delivery methods to augment internet penetration. The burgeoning mobile market in Thailand ensured that mobile phones, as well as set-top boxes, were high on the list of potential delivery devices. At the same time, the cybercafe in its different forms had already established itself as a key element in the country’s access equation.

Coming into 2012 the Thailand’s telecom/internet sector was looking quite battered. The Thai economy having suffered a major setback with the devastating floods in 2011, the ongoing global economic uncertainties were making for a generally gloomy outlook. Not surprisingly services providers in ICT the industry were finding it difficult to maintain healthy revenue growth. There were some bright spots in the market, however, with the launch of new generation services and smart device adoption. One forecast put Thailand’s ICT market at US$16.8 billion in 2012, representing growth of over 10% for the year, with mobile data the key growth factor. Thailand’s smartphone and tablet markets were expected to gain momentum. And of course, the big mobile operators have started their trial 3G services.

Market highlights:

• Thailand’s mobile market had reached 79 million subscribers coming into 2012, for an overall penetration of 113%.
• 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.
• After mobile subscriber growth settled at 10% in 2011, a similar expansion was set for 2012.
• The NTC was replaced as regulator by the NBTC in late 2011 finally clearing the way for 3G mobile licences to be issued by way of an auction, probably in late 2012.
• The broadband internet market in Thailand further strong subscriber growth in 2011, an annual rate of around 25% being the pattern.
• There was also a surge in demand for smartphones in late 2011 and into 2012; all the indications were a change in user behaviour was happening, especially with the increasing use of mobile data services.
• Overall fixed broadband penetration was still relatively low - 6% in early 2012.
• The fixed-line market was showing no signs of revival, with growth going negative in 2011 and an early return to positive growth seeming unlikely.
• The Thai telecom market has been dogged recently by accusations of corrupt, illegal and/or inappropriate behaviour by various parties in the industry. The most high profile of these cases concerned the CAT-True deal over 3G network contracts in early 2011.
• Foreign investors had become wary of the Thai telecom market on the back of regulations that were aimed at limiting foreign control of operators.

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