Analysis of Thailand's fixed broadband internet services demand: A merger screening of AIS and 3BB

Abstract

The article conducted a ‘merger screening’ of the potential impact of the merger between AIS and 3BB, which were the second and third largest internet service providers among the four major operators prior to the merger in 2022. National survey data across country in 2022 and discrete choice model was used for the analysis. Surprisingly, finding showed that AIS and 3BB were not the closest competitors, but instead True, the provider with the largest market share, was their closest competitor. Based on the pre-merger analysis, it was predicted that service prices were likely to increase, and this merger is comprised a relevant market. To accurately define the market (market definition), other operators' services should not be considered as well. Considering the rising magnitude in service prices, it is estimated that, on average, prices will increase by 7.51%–31.51% compared to the current rates in 2022. Moreover, the study revealed that the merger would lead to an average increase in cost efficiency of 15.01% of the current marginal cost, which would allow the post-merger service prices to remain unchanged if the cost savings are passed on to consumers. A key policy recommendation was for regulatory agencies to conduct further analysis of competition, including evaluating entry barriers, the response of non-merging competitors, and competition without regulated pricing. Additionally, the study examines the potential future impacts on social welfare.