BANGKOK -- The marathon auction of fourth-generation mobile spectrums in Thailand, which ended just after midnight on Saturday, sent telecom shares plunging on Monday.
The auction which offered two slots on the 900 MHz band surprised the market as the third largest mobile carrier True Corp. and broadband service provider Jasmine International, a new player in the mobile market, beat its two larger rivals, Advanced Info Service and Total Access Communication.
On the first trading day after the historic auction, investors seem to think that there were no winners in the game. Investors sold down the two winners of the bid, on worries that they will face heavy burdens from the super-high spectrum prices. True and Jasmine won 4G licenses valued at 152.492 billion baht ($4.21 billion) in total.
But the losing bidders also saw share price tumbles as they are seen to lose out on a surge in mobile data usage, given that they are stuck with limited bandwidths. The share prices of all four companies fell to year-lows.
"The price was reasonable," True CEO Supachai Chearavanont told reporters in Bangkok on Monday. "It was such a big chance that comes only once in 20 years and we didn't want to miss it," he said.
True also won the previous auction in November and will have to pay a combined price of 116 billion baht.
Supachai said that the company will not immediately issue shares to raise funds which could dilute the holdings of existing shareholders, but instead will seek bank loans, issue debentures and sell off assets, such as base stations to an infrastructure fund listed on the Thai stock exchange.
Supachai also said that an increase of the 18% stake China Mobile currently owns in the company "is not in the plans for now."
Jasmine International CEO Pete Bodharamik told a separate press conference that he is planning to start 4G services in several months. He also said that there is a "potential foreign partner" but did not disclose the name.
The auction losers were also the biggest losers in Monday's trade.
Shares of Total Access Communication, the second largest mobile carrier operating under the brand name Dtac, nosedived 27%, the largest single-day drop on record, to 27.75 baht. It was the only company not to have won new spectrums in the two recent auctions.
The company has the largest bandwidth among the three major mobile operators of 70 MHz but it has to pay fees based on revenue earned to a state-owned telecom operator.
The 4G spectrums in recent auctions are granted on a 15-18 year basis and do not require fees based on revenue. The next auction in 2018 will also be for licenses.
Industry leader Advanced Info Services' shares fell 19% to 155.5 baht. It had won a 1,800 MHz spectrum in the November auction but decided to quit this time as it thought prices were too high.
"(The) bidding price exceeded the company's expected fair value, therefore we decided to exit the auction," the company said in a statement on Monday. "AIS can allocate the capital to deploy 4G network quickly," it added. The company is the only company that has not been able to launch 4G services among the three major operators due to bandwidth shortage. It is scheduled to start 4G services using the recently acquired in January.
The spectrum prices for the 1,800 MHz auctioned in November shot up to 39.792 billion to 40.986 billion baht and that for the 900 MHz spectrum in the recent auction soared to 75.564 billion and 76.928 billion baht each.
True's shares tumbled 9% to 6.60 baht while Jasmine plunged 23% to 3.70 baht on Monday.