Market leader

AIS is currently Thailand's largest mobile operator with a total subscriber base of million (May 2001) and a 55 per cent share of the market. The company opened its analogue NMT-900 network in October 1 990 and launched a digital GSM system four years later. As has been seen in many countries around the world, the introduction of digital cellular services has fuelled much of AIS' subscriber growth, and the company is confident that the popularity of pre-paid subscriptions on the GSM platform will continue to add to this.

AIS' One-2-Call service was launched on 1 July 1999, just before the rival service from TAC, and has since become Thailand's leading pre-paid package. At the end of 1999, it had attracted just 24,000 customers, but by the end of the following year this had risen to 355,000, and by mid May 2001 there were around 725,000 subscribers -- well ahead of the rival Dprompt service, which claimed 254,200 by the same date. According to Chaiwat Suttenon, project manager of AIS, the uptake was not unexpected. "The growth in pre-paid subscribers has not taken us by surprise, and we forecast that PPS subscriptions will continue to grow as prices are lowered."

Indeed, both AIS and TAC have launched a series of promotions designed to attract customers to their pay-as-you-go services. One-2-Call has reduced its per minute charges to ([euro]), which, although cheap by European standards, is still relatively expensive for the average Thai, and the company is therefore eager to continue to promote expansion by reducing fees even further. 'This is an exciting time for cellular operators in Thailand as they manoeuvre to capture subscribers,' Suttenon adds.

AIS is certainly planning for the future of its PPS. In October 2000, the operator initiated the first phase of the rollout of a new pre-paid platform, using an intelligent network (IN) system supplied by Chinese manufacturer Huawei Technologies. Huawei designed and installed an IN platform for AIS in under four months using its proprietary Tellin intelligent networking technology. On completion of the first stage of the rollout all existing One-2-Call subscribers were successfully transferred to the new system.

Phase two of the construction began in March 2001, with capacity being raised from 500,000 users to million. A third phase is scheduled for completion this month, by which time AIS' pre-paid networks will be able to support million customers. The Thai company says the speed of design and installation offered by fluawei hove allowed it the luxury of being able to upgrade its networks to keep up with demand, without the need to make a financial commitment to the project several years in advance. This is confirmed by Wang Shengli, vice-president, Huawei's Asia-Pacific division. "Operators want flexibility," he says. "The market is so volatile they want to be able to think relatively short-term and implementation times of just 60 days allow them to do this." AIS has already revealed that it is hoping to work with Huawei on the fourth phase of its expansion project.

Rival TACtics

AIS' major rival for mobile customers in Thailand is TAC, a company which includes Norwegian operator Telenor and Thai telecoms group United Communication Industry (UCOM) among its major shareholders. TAC is the country's second largest operator with around million customers at the end of April 2001, 49 per cent of which are connected to its digital GSM network. The company expects 80-90 per cent of its remaining analogue subscribers to migrate to the digital service during the rest of 2001. In November 2000, TAC launched a mobile internet portal for subscribers with WAP enabled handsets under Telenor's international brand name Djuice.

Like AIS, TAC introduced its first prepaid package under the name Dprompt in July 1999 and managed to attract almost 26,000 customers to the new service by the end of that year. By late April 2001, the operator had increased its pre-paid subscriber base to more than 254,000, up from 230,500 a month earlier, and 168,000 at the end of March 2000. However, it has fallen way behind AIS in the race for pay-as-you-go subscribers and is still not satisfied with the take-up of non-contract subscriptions, which account for just 14 per cent of its total customer base.

In the first three months of 2001, just 20 per cent of new additions were to pre-paid packages and, although this figure is rising slowly, TAC is hoping that a series of promotions will help to speed the growth of the Dprompt offering. As well as introducing lower tariffs, the operator is hoping that a reduction in handset costs will boost the popularity of Dprompt packages.

PPS brought in just per cent of TAC's total revenues in the first quarter of 2001, although this was up from per cent in the previous three months. In the same period, the average monthly revenue per pre-paid user rose from Baht3O5 ([euro]) to Baht467 ([euro]); ARPU (average revenue per user) had actually fallen during the second half of 2000 due to a promotion on pre-paid packages as part of which the operator reduced its tariffs. In early 2001, TAC announced that it had negotiated cheaper access charges for pre-paid calls with the state-owned concession holders -- the Communications Authority of Thailand (CAT) and the Telecommunications Organisation of Thailand (TOT).

TAC completed the first phase of a network expansion project in the first quarter of 2001 after installing almost 500 new base stations, the majority of which were outside the metropolitan Bangkok area in order to improve its nationwide coverage. By the end of March 2001, the company had 2,196 GSM-1800 and 1,159 AMPS-800 base stations. The second phase of the project will be carried out during the remainder of 2001, with a further 750 cell sites due to be added to the network.

The company launched a re-branding campaign in early 2001 to advertise DTAC, the new name for its digital service. The operator says that its GSM-1800 network covers 53 per cent of the population, and it expects this to reach 70 per cent by the end of 2001.

City phone strategy

Huawei Technologies has also been involved with the sister company of AIS, the much smaller GSM operator Digital Phone Company (DPC), which launched its first commercial services under the name Hello in May 1998. Huawei has recently completed the installation of DPC's GSM network in eastern Thailand around the cities of Pattaya and Chantaburi -- Nokia and Nortel Networks provided the operator's original infrastructure in Bangkok and western Thailand.

DPC, like AIS, includes Shinawatra Corp and Telekom Malaysia among its owners and is targeting subscribers in urban areas with its 'city phone' service. DPC is already negotiating with Huawei about the construction of the next phase of its networks, which it plans to extend to the major cities in the north of the country. By May 2001, the operator had over 1,000 base stations in operation, the majority of which were in the Bangkok metropolitan area, with a total capacity of some million subscribers.

DPC is Thailand's third largest mobile operator and had attracted approximately 300,000 customers by May 2001, but with a major expansion under way it has set itself a target of one million customers by the end of the year. The operator is hoping that its policy of focussing on users in urban areas will help distinguish it from the country's two larger service providers, both of which have national coverage. According to Shannarong Sungvornyothin, associate director of DPC's engineering division, the operator is expecting its improved coverage in Thailand's cities to be attractive to its rivals. "We currently have a one-way roaming agreement with AIS which allows us access to their national network, but very soon we will offer seamless roaming between both networks, so that AIS can also utilise DPC's GSM network in urban areas."

While there are a number of smaller operators for DPC to contend with, including Taiwan Mobile and the government-backed TOT and CAT, these have only 150,000 or so subscribers between them. It seems, however, that more serious competition could be just around the corner.

Orange competition

The latest player to emerge onto the Thai mobile scene is CP Orange, a company backed by France Telecom's international mobile unit, Orange, and Thailand's Charoen Pokphand (CP) group. Although it has still to introduce a service, CP Orange's roots go back a long way. It was originally formed as Wireless Communications Services (WCS) and received a GSM-1800 licence in 1996, launching a commercial service in May 1997. Financial difficulties forced it to cease operations after less than a year, and transfer its 70,000 customers to TAC, from which it had leased network capacity. A saviour emerged in 2000 when CP agreed to acquire WCS, along with its GSM licence; it was not long before Orange had also climbed on board.

CP Orange is not being cautious about its goals; the operator is aiming to launch a service in early 2002 and take a third of the Thai mobile market within five years. According to co-chief executive, Richard Moat, 'Our mission is to become Thailand's premier communications company -- first for service, first for quality, first for innovation and first choice for consumers."

CP Orange is hoping to roll-out a nationwide network which will enable it to compete with AIS and TAC as quickly as possible. In May 2001, the company awarded a US$330 m ([euro]384 m) network construction contract to French equipment supplier Alcatel. The presence of an international heavyweight brand such as Orange is also expected to act as a lure to customers. Orange is already planning to provide free handsets for customers who take out a two-year subscription; a similar strategy has helped it to attract more than eleven million subscribers in the UK in the seven years since its launch. In addition, Orange has a great deal of experience in offering PPS via its. European subsidiaries, so will no doubt be hoping for success when it introduces a similar service in Thailand.

It seems certain that the mobile telephony market will continue to grow rapidly over the next few years, as competition between operators and market liberalisation drives down call charges, subscription fees and handset costs. However, many observers agree that potentially the largest contributor to sustained growth will be the country's PPS. Whether or not they repeat the success they have encountered in Europe, where in countries like Italy over 80 per cent of customers have opted for pay-as-you-go packages, it appears that PPS in Thailand can look forward to a bright future.

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