Advanced Info Service PCL

Net and core earnings beat our expectations. ADVANC posted a 3Q23 net profit of Bt8,146m. Core earnings increased YoY and QoQ.

700MHz will benefit ADVANC in the long run. Declining electricity price will boost profit. ADVANC-TTTBB-JASIF transaction to complete in 4Q23.

Good deals. TTTBB could reach breakeven before merging with ADVANC. Good entry point ahead of NBTC’s approval.

Net and core profits consistent with our forecast. ADVANC posted a 2Q23 net profit of Bt7,180m. ADVANC will pay a 1H23 dividend of Bt4/share.

ARPU to start rising, both mobile and FBB. Impressive outlook from 2Q23…. …through 3Q23.

Net and core profits consistent with our model. ADVANC posted a net profit of Bt6.76bn for 1Q23. Mobile revenue rose 1.4% YoY but slipped 0.9% QoQ.

Mobile ARPU likely to start rising QoQ from 2H23 onward. 1Q23 core service revenue expected to rise strongly YoY. Insights into 1Q23—core profit to rise solidly YoY.

Mobile and FBB competition to improve from 1Q23 onward. Scope for an upside from the mobile ARPU uplift in 2023. Focus on profitable revenue and market share—highlight in 2023.

Core profit beat our estimate modestly. ADVANC posted a net profit of Bt7.36bn for 4Q22. We lifted our 2023 forecast by 5% for both net profit.

Slightly improved mobile and FBB competitive climate in 4Q22. 4Q22 core service revenue to rise YoY and QoQ. Insights into 4Q22—core profit to recover QoQ.

TTTBB’s turnaround to black ink expected in 2026. High likelihood of Lease Agreement termination after Jan 29, 2032. The launch of AISIF Infrastructure Fund looks probable.

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.

Net profit aligned with model, but core profit slightly missed. ADVANC posted a net profit of Bt6.03bn for 3Q22. Mobile revenue dipped 0.3% YoY and 0.4% QoQ in 3Q22.

NBTC’s greenlight for TRUE-DTAC merger aligned with expectation. The MergeCo formation expected in 1Q23. Reduced competition and consolidation to lead to ARPU uplift.

Agenda 1.1 and 1.3 approved; but Agenda 1.2 rejected. What’s the next move for ADVANC? Dropping the deal has no impact on its fundamentals.

QoQ stable mobile competitive climate in 3Q22. 3Q22 mobile revenue to be flattish YoY and QoQ. 3Q22 core service revenue to rise marginally YoY.

ADVANC posted a net profit of Bt6.31bn for 2Q22, down 10% YoY and flattish QoQ. Excluding extra items in 2Q22—Bt335m in net FX loss and Bt62m tax benefit from investment—core profit was Bt6.58bn, down 1% YoY but up 5% QoQ. Both net and core profits were aligned with our model. Core service revenue beat our estimate by 0.7% led by the jump in non-mobile enterprise revenue which was 9% higher than modeled. We saw a jump in content costs (under service cost) and marketing expense (under SG&A expense) in 2Q22. Other service costs rose 27% YoY and 11% QoQ, led by new contents acquired in 2H21 and cost of cloud services.

We believe that its 1Q22 core service revenue was the year’s nadir with improved YoY rises expected in 2Q22 through 2H22, driven by a YoY double-digit growth of both fixed broadband (FBB) and enterprise non-mobile revenues. This is despite the high inflation environment and the heightened mobile competition in 2Q22. It remains our sectoral pick, premised on its 2H22 improved core earnings. Although the high inflationary climate has squeezed the overall consumer spending power and the mobile competition has become more intense since 2Q22, we expect ADVANC’s 2Q22 mobile revenue to improve against its YoY and QoQ 1Q22 mobile revenue decline. We model Bt29.

It requires: 1) the shareholders’ approval from JAS’ shareholders to sell stakes in TTTBB and JASIF, 2) JASIF’s unitholders to amend terms and conditions of relevant agreements and 3) the NBTC’s approval before signing the share purchase agreement and executing the transaction. The transaction is funded by a loan and will be completed within 1Q23.

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. However, ADVANC and DTAC have not followed suit, sticking to their lowest 5G price plan of Bt349. 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.

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.

ADVANC posted a net profit of Bt6.31bn for 1Q22, down 5% YoY and 8% QoQ. Excluding extra items in 1Q22—Bt42m in net FX loss and Bt62m tax benefit from investment—core profit was Bt6.29bn, down 6% YoY and 4% QoQ. Both net and core profits were 6% below our estimate due to lower service revenue than modeled. Core service revenue was 1% below our estimate led by mobile and non-mobile enterprise revenues which were 1.1% and 1.5% short of our forecasts. However, fixed broadband (FBB) revenue beat our model by 2.4% due to higher net FBB subscriber additions and its ARPU.

We expect its 1Q22 mobile revenue to drop YoY and QoQ, led by the extensive spread of Omicron and overall weaker spending in 1Q22 as well as the high 1Q21 base from the government’s two stimulus spending packages. The competition in 1Q22 was more-or-less the same as in 4Q21 except that the low-priced prepaid package of Bt100 for 2Mbps speed has been removed from the market and high-priced ones such as Bt175 for 8Mbps and Bt200 for 15Mbps have been introduced and there are greater Mobile Number Portability (MNP) postpaid packages with 50% discounts offered for the operator migration.

Data center—a big opportunity for enterprise revenue growth. Customer churns from rivals’ merger—windfall for ADVANC. Potentially higher future dividend payout.

ADVANC posted a net profit of Bt6.86bn for 4Q21, down 4% YoY but up 8% QoQ. Excluding extra items in 4Q21—Bt163m in net FX gain and Bt164m tax benefit from investment—core profit was Bt6.54bn, up 3% YoY but down 2% QoQ. Both net and core profits were consistent with our estimates. Core service revenue beat our model by 1.3%, driven by all three businesses. Gross profit and after-tax profit were in line with our model. It paid DPS of Bt4.24/share for 2H21 operations, or equal to the extra high dividend payout ratio of 95% for 2H21 (against 75% for 1H21). It paid Bt7.69/share DPS for the full-year 2021 (or at 85% for 2021).