Telecom

Q2 2013 to bring full launch of 3G

Telecom

Q2 2013 to bring full launch of 3G

Q4 2012A recap: Telco earnings up 30% YoY

Non-voice growth momentum continues

To launch 3G-2.1GHz in 2Q13, with aggressive migration plans

Top picks: CSL and SAMTEL

Q4 2012A recap. Thailand's mobile penetration jumped to 123% as of 4Q12 with subscribers

growing by 2.5mn in 4Q12 to 82mn. The operator with the highest net subscriber additions

was DTAC (1.5mn, after return of customer confidence in network quality), followed by TRUE

(632K) and ADVANC (420K). Total core earnings of all three telcos rose 30% YoY to Bt9.3bn in

4Q12A: ADVANC reported 22% growth, TRUE saw improvement with a 31% reduction in its

core operational losses, and DTAC fell 5.1%.

Non-voice growth momentum continued. Industry non-voice revenue rose 39% YoY to

Bt13.8bn in 4Q12A or 26% of core service revenues (excluding IC revenue). TRUE's non-voice

revenue grew the highest at +72% YoY, followed by DTAC's +53% and ADVANC's +33% YoY. Key driver remains mobile internet, thanks to the popularity of smartphones and social media

and the greater availability of 3G services (on 850 MHz and 900 MHz). We believe the mobile

internet service has huge room to grow after the full launch of true 3G service, especially

since this could be the only broadband option in many areas of Thailand, where broadband

penetration was only 25% of households as of 4Q12.

Full 3G in Q2 2013. ADVANC, DTAC and TRUE each won a license in the 2.1 GHz spectrum auction

in Oct 2012 and have started rolling out their 3G-2.1 GHz network. All plan to commercially

launch 3G-2.1 GHz service in 2Q13 and all have aggressive subscriber migration plans. ADVANC

and DTAC each target 8-10mn migrations and TRUE targets 5-6mn by yearend. These imply

migration of up to 26percent for ADVANC, 37percent for DTAC and 26percent for TRUE. We currently assume 25%

revenue migration by yearend for ADVANC and DTAC but 50percent for TRUE, as TRUE's 3G-850 MHz

already contributed 38% of mobile core revenue in 4Q12.

Top pick #1: CSL. While telco earnings are expected to be under pressure by the 3G-2.1 GHz

start-up costs in 2Q13 (a temporary state), CSL is expected to benefit indirectly from the

launch of the 3G-2.1 GHz because ADVANC (CSL's sister company) plans to outsource the

cloud-computing service for this service to CSL. Furthermore, CSL's Internet Data Center (IDC)

business (for corporate clients) is also in high demand with revenue growing at 30% CAGR

over 2010-2012 and momentum poised to continue in 2013.

Top pick #2: SAMTEL. We expect a series of positive news with auctions or substantial

progress in several big projects in 2Q13: 1) AOT's Advanced Passenger Processing Service

system (APPS), 2) TOT's 3G phase II+LTE project, with cabinet approval expected in 2Q13 and

3) MICT's Smart Thailand project.

Latest stories in this category

• Telecom


• Q2 2013 to bring full launch of 3G


• Thailand's ODI triples to $12bn


• Ministry to discuss funding for rice-pledging..

We Recommend

• Senators to sue Thaksin for Skype orders to party lawmakers


• Former prime minister Thaksin Shinawatra could..


• Shortcomings seen on both sides


• Ford, Toyota insist they will maintain investments..

Comments conditions

Users are solely responsible for their comments.We reserve the right to remove any comment and revoke posting rights for any reason withou prior notice.

Article source: http://www.thethailandlinks.com/2013/03/29/telecom/