The Thailand 3G Story is ahead of India as it reaches around ~40% penetration with almost 50% of the consumers having Internet-ready handsets (smartphone/feature-phones).
Thai Consumers appear to be willing to spend more for data services. This is contrary to our Indonesia and Philippine findings, where most aren’t willing to raise spending. Networks have deteriorated and now majority of the respondents are willing to raise their overall telecom spend for better network quality or faster download speeds. Poor network quality, we believe, is linked to under-investment by Thai telcos over last few years as they await direct 3G licensing. With the high likelihood of 3G auction in 4Q12, we expect 3G network investments to pick up, improving network speed and quality. Customer willingness to pay for these provides an opportunity for the telcos to benefit from 3G network roll-out in addition to the revenue share cost savings on direct licensing.
Thai 3G Penetration didn’t lead to Voice / SMS Cannibalization Unlike in Indonesia and Philippines, the majority of Thai telco users are willing to increase their total telephone bill in order to use the Internet over their mobile phones. This is despite 77% of users believing that calling / chatting over the Internet is cheaper compared to voice call, SMS or international call. This we believe is linked to more robust wallet size in Thailand vs. other EM countries. SMS usage in Thailand is low and contributes <5% of revenues. Thus Telcos do not have to defend SMS revenues due to increased usage of social networking sites as is the case of other emerging countries like Philippines and Indonesia where SMS revenue contribution is high (20-42%). AIS, DTAC and True are the Three Major 3G Operators in Thailand. Consumers clearly believe AIS offers superior network quality / coverage among the various operators.