Perhaps the worst thing that can happen to an existing or would-be mobile service provider is to lack suitable spectrum, or any spectrum at all, to compete with other leading competitors. 

Perhaps the second worst thing is to acquire spectrum, but at prices too high to earn a return on the asset.

That is a recurring problem in teh mobile industry, and could prove to be an issue in the Thai market as well.

It is surprising, but not totally unusual, that challengers bested the incumbent market leaders in the Thai 4G spectrum auction.

Advanced Info Service (AIS) and Total Access Communication were widely expected to be winners of an auction of 900-MHz spectrum for 4G mobile networks.

Instead, Jasmine International and True Corp won Thailand’s auction of two fourth-generation telecom licenses on the 900MHz spectrum, spending $4.2 billion.

Granted, True is the third-largest Thai mobile service provider, measured by subscribers, so it is no “outside” challenger. But Jasmine barely registers, in terms of market share.

The issue is whether overpaying for spectrum ultimately will prove to be a problem, as has been the case in other spectrum auctions, especially 3G in many European countries a decade ago.  

“Making a good return from the investment will be a struggle, so this could be the classic case of a winner’s curse,” said Maria Lapiz, an analyst at Maybank Kim Eng Securities.

It would not be unusual for price wars to result, with lower earnings for the leading providers, as the winning bidders scramble to monetize the spectrum assets.

The Thai spectrum auction, as often is the case, featured market leaders potentially investing to maintain leadership and deprive rivals of capacity. But Jasmine needed much more spectrum to make a serious run at the leadership ranks.

True already had amassed spectrum in an earlier auction of 4G spectrum, and clearly hopes to build its market share with all the new 4G spectrum.

AIS, 23 percent owned by Singapore Telecommunications, has lagged its rivals on 4G services due to limited bandwidth capacity, and so had ample reasons to bid heavily to add more spectrum. But AIS apparently concluded it simply could not earn a return on the latest potential spectrum, based on the high prices.

TAC, controlled by Norway’s Telenor, also seems to have concluded that prices were too high.