Equity Analysis /
Thailand

Advanced Info Service PCL: ARPU gains from TRUE-DTAC amalgamation; target price upgrade

  • Indirect windfall from the TRUE-DTAC amalgamation

  • Mobile ARPU assumption upgrade from 2023 onward

  • Still the mobile operator with the largest bandwidth in hand

Bualuang Securities
7 December 2021

We believe that ADVANC will be the indirect beneficiary of reduced mobile competition arising from the TRUE-DTAC amalgamation. Consequently, we revised up its mobile average revenue per user (ARPU) assumption by 1-4% and its net profit by 2-9% during 2023-28. ADVANC remains our sectoral pick, based on its status as the best-in-class 5G leader and its decent dividend yield of 3-4%.

Indirect windfall from the TRUE-DTAC amalgamation

We believe that the recent TRUE-DTAC amalgamation/merger will eventually lead to a change in the Thai mobile competitive landscape in terms of reduced mobile pricing competition through the industry consolidation of three main mobile players to two (the combined entity or “MergeCo” and ADVANC) and the ARPU uplift in the longer term. Once MergeCo becomes the market share leader with 54% of both subscriber and mobile revenue (excl. NT), we think it will aim at enhancing profitability rather than market share. In this case, ADVANC will stand to reap the benefits of the ARPU uplift in the longer-term.