Maybank Kim Eng has downgraded Thailand telecom companies to ‘neutral’ as the 5G technology rollout is anticipated to overwhelm the sector. Maybank Kim Eng is a wholly owned subsidiary of Maybank.
Maybank in a research note said that “Potentially costly spectrum prices, infrastructure costs vis-a-vis limited room to generate much higher cash flow winnows the most capable player.”
Some of the Thailand telecom companies bidding for 5G are Advanced Info Service, Intouch Holdings, Total Access Communication and True Corporation.
Maybank’s Thailand telecom outlook is weak despite 5G being useful in entertainment such as virtual reality and gaming. This is mainly because of the average income profile of Thais, Business Times reported. Nearly three million subscribers in South Korea pay 25 percent more for 5G services launched in 2019.
According to Maybank, Thai subscribers are unlikely to pay a premium. It also noted that small vehicles and transport have limited 5G applications as heavy capacity will require infrastructure remodelling and agencies restructuring. Another drawback is that language and technical capability control the use of 5G in remote areas.
However, Thailand government is keen to push 5G to the forefront. The Thailand 5G auction is slated for February 16 and the service is scheduled to go live by 2020-end, the media report said.
Last year, the telecom regulator offered telecoms time extension to pay for a 900 MHz licence if they take up in the 700 MHz licence auction. The payment extension included 10 installments over 10 years. Thailand’s telecom sector is yet to reach break-even point as growth has slowed down in recent years.