Kasikorn Securities (KS) is upgrading the revenue growth forecast of Advanced Info Service (AIS) and True Corporation this year to 5-6% on average, rising from 3-4%.
The move reflects their improved third-quarter performance, driven primarily by successful cost reduction strategies, growing revenue streams and easing market competition, according to Pisut Ngamvijitvong, senior equity research analyst at KS.
The recent auction of spectrum licences on the 2100-megahertz, 2300MHz and 1500MHz bands had a positive effect on the telecom industry as the winning bids led to bigger spectrum cost savings for the country’s two major mobile service operators.
Advanced Wireless Network (AWN), a subsidiary of AIS, and True Move H Universal Communication (TUC), a subsidiary of True, were the only two qualified bidders in the recent auction of four spectrum bands.
AWN grabbed 30MHz of bandwidth on the 2100MHz band for 14.8 billion baht, while TUC won 20MHz on the 1500MHz band and 70MHz on the 2300MHz band with a combined offer of 26.4 billion baht.
No bids were placed for the 850MHz band at the auction.
Mr Pisut said the Thai telecom industry should remain healthy, supported by further revenue upside from content, enterprise and retail strategies, and he anticipates solid quarterly core profit growth over the next 3-4 quarters from spectrum cost savings.
The phase of strong free cash flow expansion should remain intact and outweighs rising market concerns over a content war and ongoing litigation, he said.
AIS and True performed well in the third quarter, reflected by their revenue and earnings before interest, taxes, depreciation and amortisation growth, both year-on-year and quarter-on-quarter.
AIS’s average revenue per user (ARPU) per month tallies around 230 baht (prepaid and postpaid services combined), while True’s ARPU averages 220 baht, according to KS.
Mr Pisut said AIS’s performance in the third quarter exceeded market expectations, especially in terms of revenue growth.
Growth for True was flatter due to its network outages in the second quarter, he said. True posted net profit in the third quarter of 1.6 billion baht. Excluding one-off items, core profit was 4.1 billion baht, up 41.9% year-on-year and 17.2% quarter-on-quarter.
AIS posted net profit of around 12 billion baht for the quarter. Excluding one-off items, its core profit was 11.9 billion baht, up 41.1% year-on-year on robust revenue growth and regulatory cost savings, while the quarter-on-quarter gain was 8.6%, attributed to better cost control, said Mr Pisut.
The fourth quarter should continue the positive trend for the sector due to the peak tourist season, particularly for True which has customers in this segment, including a number from China.