Equity Analysis /
Thailand

Advanced Info Service PCL: Neutral to a slight positive impact from the TTTBB & JASIF acquisition deal

  • BOD’s final approval of TTTBB and JASIF acquisition

  • Long-term competitiveness—the main rationale for the acquisition

  • Small positive to DCF but a modest drag to P&L during 2023-25

Bualuang Securities
17 November 2022

We regard the purchase deal of TTTBB and JASIF as neutral to a slight positive because the ongoing structure of expensive rental payments to JASIF will drag TTTBB into loss, reducing ADVANC’s profits modestly in 2023-25. But it stands to gain long-term FBB competitiveness.

BOD’s final approval of TTTBB and JASIF acquisition

On Nov 15, the BOD approved Advanced Wireless Network Co., Ltd (AWN’s), ADVANC’s wholly-owned subsidiary, acquisition of TTTBB and JASIF, despite the fact that the conditions to terminate the Rental Assurance Agreement and the amendment of the Main Lease Agreement were not endorsed by JASIF’s Oct 18 unitholders meeting. Because JASIF’s unitholders rejected amendment of the conditions of the rental agreement, ADVANC must honor the same conditions of the rental contract through the end of the contract in Jan 2032. However, the renewal of contract beyond the expiry date will require a material change to the existing terms and conditions to support the competitiveness of the business by ensuring appropriate operating costs over the long run. It also will consider the telecom asset monetization with options to bring about more effective cost of capital. The transaction is expected to be completed within 1Q23 after the NBTC approves it.