AIS third-quarter profits decline due to competition, covid

Advanced Info Service Plc (ADVANC) reported its third-quarter financial results this week with a 26 per cent drop in profits from last year and 7 per cent down from the second quarter due to the prolonged impact of the coronavirus pandemic and market competition.

Advanced Info Service or AIS is a wireless telecommunication giant in Thailand with a subscriber market share by revenue of almost 50 per cent. The company also provides fixed broadband and enterprise data service.

“Domestic lockdown in Thailand was lifted and business activities resumed in this quarter. However, the economic recovery remained vulnerable as the service sector continues to be impacted by the absence of foreign tourists.” said the company.

The third-quarter net profit stood at 6.513 billion baht, down 26 per cent year-on-year and 7 per cent quarter-on-quarter. The earnings were slightly below TISCO analysts’ estimate of 6.62 billion baht.

For revenues, AIS gained 41.7 billion baht in the third quarter, down 6.7 per cent year-on-year and 1.3 per cent quarter-on-quarter.  

Mobile subscribers

According to the report, total third quarter mobile subscribers were maintained at around 41 million in the absence of the travelers segment and continued movement of subscribers from prepaid to postpaid subscription.                          

The postpaid segment increased about 9 per cent year-on-year and 2.5 quarter-on-quarter, while pre-paid subscribers declined 4 per cent year-on-year and 1 per cent quarter-on-quarter.                                                                                                          

Even though the mobile prepaid subscriber net loss has lessened in the third quarter, Postpaid’s average revenue per user (ARPU) fell from 523 baht to 498 baht per month while prepaid rose from 156 to 157 baht per month.

The Postpaid ARPU fell from price competition triggered by a weak economic environment, said AIS.

The company also revised its 2020 revenue and EBITDA guidance to a low-mid single digit from low single-digit.

On the other hand competitor Total Access Communication or DTAC posted 3Q net profit at 1.436 billion baht, down 18.3 per cent year-on-year and, 24 per cent quarter-on-quarter.

DTAC has total subscribers in 3Q of 18.7 million (12.6 million of prepaid and 6 million of postpaid), declining around 107,000 from the second quarter.

The average revenue per user (ARPU) of DTAC was 255 baht per month, slightly up from the last quarter but declined 1.3 per cent year-on-year (517 baht per month for postpaid users and 129 baht per month for prepaid users).

Stock price                                                               

Going into the noon break on Friday’s trade, the market already responded to the company’s third-quarter performance by bringing its share price down by 2.23 per cent to 175 baht per share, with a transaction value of 721.07 million baht.

Analysts at MayBank Kim Eng said that ADVANC earnings growth is projected to be flattish in the next three years while waiting for the next game changer that could come from 5G availability.

“Its resilient earnings should be given a valuation premium amid the highly uncertain growth outlook,” said MayBank Kim Eng.

The target price of ADVANC from MayBank is at 229 baht per share.

Stock Price Info

Stock Fundamental

Peer Comparison

Stock Price Chart

COVID-19

Covid-19 leaves Gen Z among the impacted group of people, while women beat men in being stressed out

The impact of Covid-19 outbreak was not just on the health and economy of the people of Thailand but...

Latest article