Taiwan to issue 4G licenses by 2014

Operators' amortization expenses may shoot up post licensing.

Nomura says that recent talks within the telecommunications industry seem to suggest that National Communications Commission may issue 4G service licenses some time in 2014.

Here's more from Nomura:

No price tags yet for upcoming 4G licenses, hoping government will price the spectrum at reasonable range. When we look at the one-time consideration paid by the major three Taiwan mobile operators for their respective 3G service license, we take a cautious view on whether the government will grant the upcoming 4G service licenses at a lower price.

For the 3G service licenses, the frequency spectrum allocation was in the 2 GHz frequency band. With regard to the 4G service licenses, we believe the frequency spectrum allocation could be in the 1800 MHz frequency band. Due to a possible allocation of lower frequency band to 4G service licenses, we believe the government has better grounds to put higher price tags in association with upcoming 4G service licenses.

Amortization expense may trend upward post 4G licensing. For the 3G cellular services concessions paid back in March 2002, each of the major three Taiwan mobile operators will amortize the one-time consideration from commencement of 3G operations till the license expires. For this, each operator is incurring an average amortization
expense of TWD742mn per annum.

In the event that Taiwan mobile operators pay a hefty sum for 4G service licenses, that could also translate into a heightened level of amortization expense for the operators.