We saw positive operational indicators in 1Q21—stable QoQ prepaid average revenue per user (ARPU), sustained strong mobile and fixed broadband (FBB) net additions and a shallower YoY drop and a flattish QoQ service revenue. Although the third COVID-19 wave is likely to impact the 2Q21 service revenue, we still expect its strong recovery in 2H21. We reiterate a BUY call on ADVANC, premised on a strong 2H21 earnings rebound and its cheap valuation—EV/EBITDA of 6.7x against its long-term mean of 7.3x.
Positive sign of a stable QoQ prepaid ARPU in 1Q21
We saw stabilized mobile competition in 1Q21 with the ‘fixed-speed unlimited’ postpaid and prepaid promotions to be continued from 4Q20. Although the ‘Bt350 for 10Mbps speed’ postpaid promotion has continued to pressure its postpaid ARPU (Bt480-485/sub/mth), the prepaid ARPU is likely to be more stable QoQ, as the existing ‘Bt150 for 4Mbps speed’ has come close to its current prepaid ARPU of Bt150-155/sub/mth. Overall, we model the blended ARPU of Bt231/sub/mth in 1Q21, down 4.5% YoY and 1.5% QoQ. We assume that the net mobile subscriber additions will be a positive of 490k in 1Q21, which is close to 495k in 4Q20, led by the stronger postpaid net additions from greater prepaid-to-postpaid migration (from the bundling with iPhone 12 sales).