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Thailand: Cellular Communications Market

Approximately $1.5 billion of investment is expected to enter Thailand when services for 3G, or third generation mobile technology is introduced. The targeted launch date is tentatively set for the first half of 2010. 3G service will offer video and broadband services to cellular users, and with 98 percent of Thai citizens using cellular devices, the industry is focused on moving beyond the mature 2G, or second generation, network. The National Trade Commission (NTC) of Thailand, tasked with issuing the licenses, has been delayed in taking this initiative in order to review both planned providing and number availability issues.
In addition, the NTC’s authority to issue licenses has even come under scrutiny. These ongoing political strains have complicated efforts to deliver a timely plan for a new cellular network. The deployment of a 3G telecommunications network in Thailand will require installing new base receiver stations, radio base stations, and switching equipment will create opportunities for U.S. companies offering services or equipment to that sector.

Market Demand
Thailand has experienced delays in private and public sector investment in information and communications technology (ICT) as a direct result of political uncertainty in the country since 2006. These conditions have in turn affected the confidence of local and foreign investors.
Even with these challenges, Thailand’s telecommunications sector offers promise for exporters due to an influx of new technology and anticipated new demand. The Worldwide Interoperability for Microwave Access (WIMAX), often referred to as an advanced 4G wireless technology, will join 3G as a key driver of the local ICT industry.
Currently, telecom service consumption contributes three percent to Thailand’s GDP. Mobile handsets, mobile internet devices, and smart phones are among the products that will generate demand in the communications market. Additionally, the demand for accessories such as mobile storage, Bluetooth technology, wireless aircards, network devices and base stations, will expand.

Market Data
According to the Thailand ICT Market 2008 survey conducted by the National Electronics and Computer Technology Center (NECTEC), Thailand’s ICT spending in 2008 was valued at $15.5 billion, reflecting an 8.3 percent increase over the previous year.  The largest share went to the communications segment, which accounted for 69.9 percent or $10.83 billion. This was followed by the hardware, software, and computer services, which represented 13.9 percent, 11.6 percent, and 4.6 percent, respectively. It is estimated that in 2009, the ICT market will have grown by 5.2 percent.  Despite the economic crisis, the wireless equipment market has enjoyed growth of 13.1 percent over the same period last year. In 2009, this segment is expected to have grown by 15.4 percent (valued at approximately $750 million) as a result of increasing domestic demand for broadband Internet, mobile handsets and devices. The wireless equipment market has been driven by 3G and WIMAX technologies. Most manufacturers have continued to invest in  expanding their network infrastructure and services. The licensing of 3G services, expected to be rolled-out in the first half of 2010, are central to the growth of the wireless equipment market. According to the NTC, the minimum reserve prices for 3G mobile broadband spectrum have been set in the range of $100-200 million. The 3G licenses will be the driving force of investment in network infrastructure expansion and will stimulate spending on wireless equipment.

Currently, Thailand has a mature 2G market, dominated by Global System for Mobile Communications (GSM) technology, with 62 million subscribers or a 98 percent penetration rate (as of Q1 2009). This figure is expected to reach 100 percent by the last quarter of 2009, and cellular market value is expected to reach $4.8 billion by the end of this year. Strong competition among telecommunications operators will remain in the coming years, highlighting the need to enhance existing networks and to prepare for 3G technology.

According to the NECTEC findings, the cellular market was worth $4.6 billion in 2008 with 5.6 percent growth compared to the previous year. Pre-paid users for mobile voice services continue to grow steadily and remain the majority of customers. Additionally, the cellular market has benefited from the granting of more licenses and number allocations to international voice service providers by the National Telecommunications Commission (NTC). As new service providers enter the market, consumers are likely to experience better prices and improved service quality.  The cellular market is projected to have grown by 3.7 percent in 2009, increasing its value to $4.8 billion.  Mobile service providers are likely to compete in network coverage and value-added services.
The demand for mobile services in provincial areas is encouraging, especially in the North and the Northeast of Thailand where the number of mobile voice service users per capita is still low. Fixed line coverage in rural areas is constrained due to high cabling costs. This has provided an opening for cellular service providers.
The non-voice service sector of the cellular market was valued at $463 million in 2008 and is expected to have grown by 16.6 percent to $540 million in 2009. The significant drivers of the non-voice service sector continue to be SMS and MMS services. GPRS services are expected to play a significant role in 2010 due to an increasing demand for GPS services and wireless Hi-Speed Internet. This is attributed to the growing number of Smartphone and PDA users.
3G technology is expected to become a new stream of profit for operators in the Thai cellular communications market. 3G will enable network operators to offer users a wide range of advanced services while achieving greater network capacity. Services will include wide-area wireless voice telephony and broadband wireless data in mobile environments. At the time of this report, 3G licenses are not available. However, 3G service licenses are currently expected to be granted via auction in second half of 2010. Under the terms of these 15- year licenses, winning bidders must expand their 3G networks in two phases. The first phase must cover 50 percent of potential users in two years, and the second must reach 80 percent within four years. 3G services are expected to be available for commercial use by the end of 2010.

Best Prospects and Opportunities
Thailand’s investment in wireless telecommunications network development is expected to reach approximately three billion dollars in the coming years. Capital investment has chiefly been focused on the GSM network platform. For example, AIS plans to invest approximately $1.5 billion under a three-year 3G Cellular Communication Market network expansion project. The network expansion will include installation of new base transceiver stations, radio base stations, supporting facilities, switching equipment and the introduction of 3G technology.
U.S. suppliers who specialize in mobile applications, speech recognition software, billing applications, and network management applications are well positioned to supply this expanding network. To outperform Asian competitors, U.S. firms must deliver premium services orientated towards the top tier of the market.

Key Suppliers
According to import statistics reported by the Thai Customs Department, the major suppliers of telecom equipment and products to Thailand are China, Korea, Japan, Taiwan, Finland, France, the United States and Germany.
Equipment entering the market from China, Korea, and Taiwan has the advantage of low-cost production that yields lower prices in the bidding process. Consequently, higher-end, more sophisticated technology from North America and Europe is losing market share to some Asian manufacturers.

Market Entry Strategies
Small to medium-sized suppliers that do not intend to establish branch offices in Thailand are strongly advised to appoint local sales representatives to import their products and provide customer service support.
Without a local point of contact, it is difficult to follow through on technical service guarantees and to manage new projects. Lack of local representation can also present a credibility challenge with respect to product quality and reliability.

Market Access Issues & Obstacles
Import licenses and type approvals are required by the NTC prior to importing telecom equipment, including equipment for fixed-line operation, cellular phones, cordless phones, wireless LAN equipment, switching networks and base station equipment, which has not been granted a license for those purposes.
Type Approvals: Only Thai citizens and companies registered in Thailand may submit requests for type approvals. Foreign suppliers must appoint a local agent or distributor to submit a type approval application to the Commercial Service Section of the Radio Communication Licensing Division of the National Telecommunications Commission.
Intellectual Property Rights: Thailand has a weak track record with regard to IPR protection. Although laws and regulations are in place to protect copyrights, trademarks and patents, enforcement remains a significant shortcoming. A “gray market” for mobile phones is prevalent.
Government Policy: Inconsistent policies from the Thai government and bureaucratic procedures are among the major barriers to entering the telecommunications industry in Thailand. Many projects are “in limbo” pending implementation of the new independent regulators: the NTC and the NBC. In some cases, telecom project winners have been announced, but the projects cannot be implemented because of personnel changes in the Ministry and among decision-makers.

The total value of the ICT market 2006 is estimated to grow 10% to $10,053 million and will grow to $11,098 million in 2007. Sectors driving market demand will be mainly government, education, and enterprises. Meanwhile economic factors such as oil prices, inflation, and uncertain political situation will also have an impact. In 2006, Thailand has had 800,000 broadband subscribers which will grow to 1.5 million users next year. Over the long term, the compound average growth rate of the ICT market between 2005-2008 is projected at 21 percent.

The future of ICT in Thailand is bright. Both the government and business sectors are well positioned to experience the benefits of ICT on a significant scale. The information infrastructure is becoming more universal and less expensive. A growing interest in digital lifestyle products among consumers and more ICT consumption among small and medium sizes businesses (SMEs) should fuel growth. Therefore, over the long term, the compound average growth rate of the ICT market between 2005-2008 is projected at 21 percent. These developments are creating great opportunities for U.S. ICT suppliers

The total value of the ICT market 2006 is estimated to grow 10% to $10,053 million and will grow to $11,098 million in 2007. Sectors driving market demand will be mainly government, education, and enterprises. Meanwhile economic factors such as oil prices, inflation, and uncertain political situation will also have an impact.

Best Prospects and Prospective Buyers
Specific opportunities include:
Infrastructure (network, fiber optic, server)
Security and enterprise software application
2G network maintenance
3G network upgrades
Broadband internet infrastructure
Wireless communication network
Skilled IT people

Most high tech products (both hardware and software) are imported. Products from the United States, Germany, Japan are more popular than products from other parts of the world. This is based on customer perception about the latest technology and quality of ICT device.

U.S. exporters are highly encouraged to appoint a local agent to deal with regulations related-issues, bureaucratic procedures, local business practices and marketing. With telecommunication equipment, foreign suppliers require a distributor to submit type approval application the National Telecommunications Commission.

Market Entry
Small and medium suppliers who do not establish a branch office here are strongly recommend to appoint a local sales representative to import their products and deal with customers. With a telecom equipment suppliers, import license and type approval are required to be approved by the National Telecommunications Commission (NTC) prior to importing products.

Price sensitivity in Thailand
Low cost products from China, Korea, and Taiwan
Most Chinese and Taiwanese products concentrated on telecommunication equipment and software automation that requires low production costs and much less research and development. Importantly,their products, offering the lower price, play a significant role in the purchasing decision in the Thai market, especially government projects.

Internet users 1,200,000
Internet Users Rank 47
Internet Users Date of Information 2001
 Telephones - mobile cellular 3,100,000
Cell Phone Rank 26
Cell Phone Date of Information 2002
 Telephones - main lines in use 5,600,000
Telephone Rank 25
Telephones Date of Information 2000
GDP - real growth rate(%) 5.2
Growth Rank 101
Growth Date of Information  2002 est.
GDP - per capita $6,900
GDP/pc Rank 99
GDP/pc Date of Information  2002 est.
GDP $429,000,000,000
GDP Rank 22
GDP Date of Information  2002 est.
Population 64,265,276
Pop Rank 20
Pop Date of Information  July 2003 est.

This site was last updated 27 February, 2011