We reiterate our TRADING BUY on DTAC in anticipation that the TRUE-DTAC amalgamation deal will proceed after the NBTC approved the deal on Oct 20. The MergeCo formation is expected by YE22 or in 1Q23.
Below our model
DTAC posted a Bt488m net profit for 3Q22, down 41% YoY and 51% QoQ. Excluding five extra items in 3Q22— Bt8m in FX loss, Bt13m loss on fair value hedge, Bt160m in amalgamation-related costs, Bt48m loss from asset impairment and Bt170m in partial insurance claim—core profit was Bt547m, down 21% YoY and flattish QoQ. Net and core profits were 20% and 27% below model, respectively, thanks to lower service revenue and higher service costs than expected. Service revenue (excl. IC) was 1.2% below our estimate while service costs beat our model by 3%, led by higher depreciation and amortization expenses than estimated.