Equity Analysis /
Thailand

Advanced Info Service PCL: Scope for valuation upside from NT’s 700MHz partnership deal

  • Core service revenue likely to recover MoM in May-Jun

  • Mobile and core service revenue to bounce strongly in 2H22

  • 700MHz partnership deal with NT makes some progress

Prasit Sujiravorakul
Prasit Sujiravorakul

Equity Research Analyst

Bualuang Securities
30 May 2022

Core service revenue seems to have bottomed out in 1Q22 before a slight recovery in 2Q22 with a strong bounce in 2H22. Scope for an upside will come from the potential partnership with NT for access to NT’s 700MHz bandwidth. It is our sectoral pick, based on its improved 2H22 core earnings and its attractive valuation—EV/EBITDA of 8.03x against its recent high of 9.13x in Aug 2019.

Core service revenue likely to recover MoM in May-Jun

ADVANC’s core service revenue in Apr 2022 was dragged down by: 1) weaker macroeconomics and higher cost inflation, suppressing purchasing power and 2) more intense competition from the special “fixed-speed unlimited” offerings from rivals to retain their customers’ churns, which has continued to depress mobile ARPU. However, its core service revenue is likely to improve MoM in May-Jun, triggered by greater reopening for tourism in May-Jun, the easing of Omicron situation and the back-to-school and back-to-office period. Prepaid revenue will rise in tandem with more tourists during the reopening.