Thai court blocks 3G auction

BANGKOK -- A Thai court ordered the halt of a third-generation mobile license auction, a move which set the country back another few years in its attempt to adopt high-speed mobile phone services, sending local telecom shares sharply lower.

Many Asian countries are already introducing fourth-generation mobile-phone technology, but in Thailand 3G services could be delayed two years while a new regulatory body is formed, preventing carriers from tapping new revenue streams and delaying foreign investment.

"We're the very last country for this technology. Our neighbors like Laos and Cambodia are moving ahead of us," said Panyakit Chaovamu, an analyst at stockbroker SICCO Securities Plc in Bangkok, adding the court decision could stall earnings growth in the industry for one or two years.

The Supreme Administrative Court on Thursday upheld an injunction from a lower court that had frozen the process at the request of a state telecoms company.

The 3G licensing would have dramatically changed the way operators pay fees to the government, a crucial step in reforming the $4.7 billion sector that could lure more foreign players by leveling the playing field between private and state operators.

The move highlights regulatory risk and increases uncertainty over which authority is in charge of Thailand's telecoms industry.

Repeated delays have disappointed telecoms equipment makers, and operators urged the government to solve the regulatory problems that had dogged the industry for more than a decade.

"The operators are scapegoats of the contradictions of government policies," said Thana Thienachariya, head of strategy at No. 2 mobile carrier TAC (Total Access Communication Pcl).

Wichian Mektrakarn, chief executive of AIS, said Thailand had lost a chance to deploy new technology that could attract foreign investment and spur the economy.

"Vietnam is better placed than Thailand in terms of telecoms infrastructure, which could help attract foreign investors to the country," Wichian said.

The regulator has said the arrival of 3G would have spurred about $1.5 billion in investment in the sector over three years.

The 3G technology allows users to surf the Internet faster on mobile devices for downloading music and data, allowing operators to generate new business from data services in a country of 67 million people where almost everyone has a mobile phone.

Some analysts still recommend AIS shares because of its strong balance sheet and expectations it could pay a good dividend now it does not need to splash out on 3G investments.

Thailand has struggled with the deregulation of its telecoms industry since before the 1997-1998 Asian economic crisis. Progress has been painfully slow and strewn with political obstacles, including multiple changes in government.

Under present arrangements, which most of Asia has done away with, operators pay a proportion of their revenue to state-owned firms for the right to run their networks. This favors the big state-owned telecommunications groups, TOT Plc and CAT Telecom Plc, which have gone to the courts to defend their interests.