Oct. 17--DTAC has warned that any further delays in 3G licence auctions could deter foreign investment and undermine the credibility of government policy.

If the government changes the way it treats foreign investors, it could damage the investment environment, said Tore Johnsen, CEO of the country's second-largest mobile operator.

But he expects a delay to be only of weeks or months, and said DTAC is confident of winning a licence. The National Telecommunications Commission (NTC) hopes to award four 3G licences by the year-end -- three for 10 MHz and one for 15 MHz.

Mr Johnsen argued that the reserve price for a 3G licence should be between 2 billion and 4 billion baht, not the 10 billion set by the NTC. "The price is unreasonably high and tarnishes free and fair competition rules," he said.

He also suggested the NTC change the payment terms for 3G licences from a lump-sum to only half of the fee first and then installments over 10 years or over the whole life of the concession.

"This will give TOT and CAT Telcom a revenue stream on a yearly basis, while easing private operators' financial burden," he said, referring to state telecom enterprises that rely heavily on concession revenues from private operators.

Mr Johnsen rejected concerns that private operators might migrate their customers from the current concession-based companies to avoid sharing revenue with the state enterprises.

He said 3G was considered a supplementary service and firms could not force customers to move from voice-based service to mobile data numbers.

3G would take some time for the market to fully take up given the time for network rollout and the full availability of 3G handsets and devices, he added.

"TOT and CAT would only face a drop in revenues on a gradual basis, not a zero amount," he said. Private operators would still need to use existing 2G networks, which means the two state enterprises could earn new revenue from infrastructure rental fees under the build-transfer-operate contracts, he added.

The two state enterprises should adjust their business direction and prepare to face a new regulatory system, he said.

Mr Johnsen urged all parties to recognise that consumers, businesses and the country would benefit from 3G because the communication infrastructure would be faster and more efficient.

Commenting on concerns that "foreign state companies" -- as rival True Move terms the shareholders of DTAC and top-ranked AIS -- could threaten national security, he said he saw no regulatory difference between the existing 2G and 3G.

While Telenor, DTAC's major shareholder, is a state enterprise of Norway, the company is a passive shareholder in DTAC and the Norwegian government is not involved in the company's business activity, he said. "There should be nothing to be concerned about since Norway has only 4 million people."

DTAC is in compliance with foreign shareholding rules, and he sees no need to adjust its shareholding structure to respond to speculation, he said.

In his view, only one or two foreign companies will participate in the 3G bid given the 100 percent penetration rate of mobile phones, unclear regulations, a potentially troublesome 3G bid process, and unclear definitions the roles of TOT and CAT. A foreign company without a 2G operation in Thailand would also be at a disadvantage, he said.

DTAC shares closed yesterday on the SET at 40 baht, up 2.50, in trade worth 473 million baht.

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