Despite a deeper 2022 earnings cut due to weaker-than-expected 2Q22 service revenue related to heightened competition and cost inflation leading to weaker spending power, the market has instead focused on Jul 10, which is the deadline for the NBTC’s decision to approve the TRUE-DTAC amalgamation deal. We assign a 70% probability that it will eventually approve it with certain conditions, which will catalyze its share price. Our TRADING BUY stands, based on the amalgamation progress and a cheap valuation—EV/EBITDA of 5.9x against its recent high of 7.2x in Oct 2015.
More intense overall mobile competition in 2Q22
The competition for postpaid and prepaid segments has intensified 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 of Bt299, although ADVANC and DTAC have not followed suit, sticking to their lowest 5G price plan of Bt349. The competition will stay intense in 2H22.