Equity Analysis /

Thailand: ICT - TRUE-DTAC amalgamation and ADVANC’s TTTBB buyout looming

  • More intense mobile competition in 2Q22 through 2H22

  • Downside risk to our mobile service revenue forecast in 2022

  • Strong service revenue bounce expected in 2H22

Bualuang Securities
27 June 2022

We believe that two important events—NBTC’s final decision on approving the TRUE-DTAC amalgamation deal and ADVANC’s buyout of TTTBB and JASIF—are likely to be concluded soon and will spur the telco share prices. With the industry consolidation to only two players, we expect reduced competition for mobile and fixed broadband businesses, industry revenue uplift and improved quality service offerings in the longer term. Despite heightened mobile competition in 2022 and a possible 2022 service revenue downgrade, the market will pay more attention to the above two events which will be the catalysts for telco’s share prices. We rate a BUY on ADVANC (value additions from the TTTBB’s buyout) and TRADING BUYs on TRUE and DTAC (long-term synergy from amalgamation).

More intense mobile competition in 2Q22 through 2H22

We have seen more intense mobile competition for both postpaid and prepaid segments in 2Q22. Mobile operators have offered to double speeds for the ‘Net No Limit’ prepaid packages. For example, the 1Mbps speed has been upped to 2Mbps for Bt350 for the 30-day usage period. Moreover, the postpaid 5G competition has intensified, led by TRUE offering the lowest 5G price package of Bt299. However, ADVANC and DTAC have not followed suit, sticking to their lowest 5G price plan of Bt349. Besides the intensifying competition, the optimization of consumer spending during the macroeconomic pressure and cost inflation has led to the downward pressure on blended mobile ARPU in 2Q22. We assume that mobile competition will stay intense in 2H22 through 2023 (or one year after the MergeCo establishment) before easing in 2024 and thereafter.