Taiwan 4G bidding price set to reach NT$90 billion mark
By Kathryn Chiu ,The China PostTAIPEI, Taiwan -- The total bid price for Taiwan's fourth generation (4G) increased to NT$88.685 billion on Oct. 11, and is expected to pass the NT$90 billion mark sometime soon, according to the National Communications Commission (NCC).
October 14, 2013, 12:13 am TWN
Taiwan's 4G license public bidding entered the 27th day and 270th round auction on Oct. 11. Total bid price for the 12 frequency band units available to operate the 4G mobile communication services increased to NT$88.685 billion, 147.03 percent beyond the corresponding total floor price of NT$35.9 billion, the NCC said.
The bid prices of the highly sought-after 1800MHz C5 band units climbed to NT$24.205 billion, breaching the NT$24 billion mark for the first time and reaching 8 times the floor price of NT$3 billion. The 1800MHz C1 band units spectrum became the second highest with the bid prices of NT$11.17 billion, marking the first time to breach the NT$10 billion mark.
As of yesterday, band units of 700MHz, 900MHz and 11800MHz have respectively accumulated bid prices of NT$22.38 billion, NT$6.87 billion and NT$59.435 billion.
The NCC has set floor prices for the 12 available frequency band units at a total of NT$35.9 billion for open-bid competition for 4G mobile communication licenses.
NCC Vice-Chairman Yu Hsiao-cheng (虞孝成) on Friday told local media that bid prices for 900 MHz B2 and B3 band units saw a significant spike of NT$4 billion on the eve of National Day, looking set to push the total bid price of Taiwan's 4G beyond NT$90 billion mark in the short term.
Compared to 4G auction history in other countries, Yu indicated that Taiwan's 4G total bid price for 1800 MHz band units is above internal average while that for 700 & 900 MHz band units is cheaper.
Despite overheating concerns, Yu said NCC has yet to decide whether to lower the percentage of increases in the bids for 4G telecom licenses since NCC believe this move will lead to unwelcome result of lengthened auction time.
The NCC will closely monitor each round to see if further actions should be taken, Yu added.
Telco Shares Daunted by Prohibitively High 4G Bid Price
As the total 4G bid price goes higher and higher, the share prices of telecom sector has recently found themselves in a dowered spiral. Many have warned that telecos will overspend on a 4G license, which would in turn drive up their operating cost and leave consumers to pay more for a 4G service.
National Chiao Tung University Vice President Lin Yi-bing (林一平) yesterday said that telcos' bidding frenzy has been turning 4G business into a hot potato.
Lin based his calculation on 1800 MHz C5 band unit to predict that annual amortization for 4G license mounts to NT$2 billion in 10-year amortization schedule.
In an oversaturated telecom market like Taiwan, the bottom lines barely have a look-in to turn black in ten years since it's almost impossible for future 4G service providers to post annual earnings of over NT$1 billion, Lin added.