Advanced Info Service Plc. 6 th Annual dbAccess Asia Conference May, 2015
AIS at a glance 42m users No.1 mobile operator in Thailand post Others IR paid 7% 2% 18% 12% 53% Voice pre 49% 29% Non- paid voice 88% 42% Breakdown of Service Revenue Breakdown of customers Breakdown of Revenue Market Share Investment highlight Strong capital structure Moving toward licensing scheme Dividend payout ratio at 100% Bt 113% 2G ( G (BTO) O) 3G 3G ( (Licen cense) e) 1Q15 1Q 15 100% 100% 93% 900MHz ended 2100 MHz ended Net debt to equity 0.24 Sept-15 Dec-27 Net debt to EBITDA 0.13 1800MHz under remedy period 8.43 10.9 12.15 12 until Jul-15 ROE 92% 2011 2012 2013 2014 2
From Telecom Service Provider to Digital Life Service Provider Fixed Digital Mobile Broadband Contents Largest telecom New business growth New source of revenue infrastructure in Thailand Driven toward convergence Support mobile and fixed Core element in digital Operating synergy with mobile broadband business era of “IoT” business Partnership model 3
Strengthening mobile business in 2015 Maintain market share with competitive offerings Enhance network quality to meet customers satisfaction by installing small cells and Super Wifi Increase 3G device penetration in mid-to-low tier segment by launching mid-tier smartphones and low-tier 3G feature phones Renovate and expand more shops to enhance customers experience Acquire more spectrums to develop the technology and increase capacity 4
Continued strengthening network focusing on customers experience 22,800 3G base stations including small cells 97% population coverage since mid-2014 AIS Super WiFi 650 Mbps, faster than 4G 33,000 total AIS WiFi APs 2,000 AIS Super WiFi APs • 5
Increase 3G device penetration to 70% 42m AIS Mid-tier • Low cost smartphone • High spec smartphone with attractive price • Varieties of smartphone 3m 39m ranges from Bt1,690-4,790 LAVA 5.0” PRO 900MHz-BTO 2100MHz-License 4,790 Baht Low-tier • Budget 3G feature phone 22.4m 16.6m • AIS customers • Trade-in 2G phone • Pay Bt200 (if ARPU > 3G Device 2G Device Bt50) or Bt400 (if ARPU < Bt50) 58% penetration • Free airtime of Bt200 or 799 Baht Bt400 6
AIS officially launched Fixed Broadband Officially launched on 27 th April : Bangkok, Chiang Mai, Nakhon Ratchasima, Udon Thani, Khon Kaen, Phuket, and Hat Yai Technology: FTTx Target: 80,000 subs in the first year, Now: 5,200 subs CAPEX in the first year: Bt1bn CAPEX for the first phase: Bt4.6bn 7
Fixed Broadband landscape in Thailand 7m 7mn su subsc bscrib ibers 5m 5mn su subsc bscrib ibers in 5 y in 5 year ears Others 3% Key player 28% 32% Others 37% Technology Technology Technology DL UL Price DL UL Price DL UL Price Mbps Mbps Mbps Mbps Mbps Mbp /month /month /month s (Bt) (Bt) (Bt) Docsis 15 1.5 599 ADSL 10 0.512 590 ADSL 10 1 590 Docsis 30 3 1,299 ADSL 15 1 900 ADSL 13 1 690 Docsis 50 5 2,799 VDSL/FTTx 30 3 1,200 ADSL 15 1 990 Docsis 100 10 4,999 VDSL/FTTx 50 10 2,500 FTTx 30 3 1,290 Docsis 200 15 9,999 FTTx 100 30 5,900 FTTx 40 5 2,200 FTTx 200 50 9,900 FTTx 50 5 3,500 8
Live digital, Live more launched new products and many more to come AIS Playbox • Entertainment platform Entertainment TV / games / karaoke / music Cloud • Beat banking • Mobile banking with interest Digital Mobile money Bill payment / money transfer • content iSWOP • Swap usage between voice and data M2M • Offer to postpaid subscribers Games/Apps 1 minute = 5 MB •
AIS Shop: Toward Digitization Base Service on mobility • One-stop service via iPad • Prepaid identification, register new SIM, or buy a new phone Service on intelligent Kiosk • Payment Kiosk • Service Kiosk • change SIM • Vending Kiosk • buy AIS premium stuff Service by Digital Life Guru • Well-trained staff with knowledge of AIS’ Digital Life Service, new market trend, and service mind
1Q15 financial highlight (Unit: Bt mn) Service revenue ex. IC EBITDA Sales margin +4.6% YoY +9.8% YoY +160bps YoY +0.9% QoQ +2% QoQ +210bps QoQ 30,309 30,037 3.9% 18,073 17,727 28,967 16,454 2.3% 1.8% 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 driven by growth in mobile data • • YoY, lower regulatory cost • margin gained from iPhone 6 and QoQ, lower marketing expenses LAVA sales • % EBITDA margin Net profit % Service EBITDA margin +4.4% YoY +200bps YoY -50bps YoY +1.1% QoQ flattish QoQ +80bps QoQ 9,897 55% 55% 9,481 9,792* 53% 45.1% 43.8% 44.6% 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 • YoY, improving revenue and lower • YoY, dropped from higher sales • YoY, growing EBITDA offsetting QoQ, rose from higher sales margin • regulatory cost higher D&A and finance costs • QoQ, lower marketing expenses • QoQ, improving EBITDA, FX gain, offset by higher other costs and lower tax expense 11 *normalized
CAPEX maintained at Bt40bn Rolling out FBB Strengthening mobile Keeping on investing in network to enhance customer experience (excluding 4G investment) 40bn 8bn 29,000 BTS 1bn for including small cells 250,000 homepasses 7.2bn and 80,000 subs 1Q14 1Q15 FY15 Expanding shops %CAPEX to sales 28% 24% 24% 9% 12,000 APs 6% 650 Mbps, faster than 4G 2011 2012 2013 2014 1Q15 12
Guidance for 2015 (maintained) grow 3-4% • Service revenue • grow 10% with margin close to zero Device sales 70% 3G device penetration • • increase by 100-200 bps EBITDA margin marketing cost remained 4% of total revenue • • Bt40bn • Additional 3G BTS, fiber optic rollout, and shop CAPEX renovation and expansion • D&A is expected to increase by 10% • This excludes budget for 4G auction & investment maintained 100% dividend payout Dividend • 13
Regulatory concerns in 2015 According to the NBTC, 1800MHz auction will be held in November and 900MHz in December. 900MHz concession will be expired in Sept-15 Expect 2G network service to enter remedy period to be announced by NBTC Under remedy period 2G network must continue to serve customers No revenue sharing Pass on any operating profit to NBTC 2G asset fully amortized 14
APPENDIX
Depreciation & Amortization Breakdown of D&A Rising 3G investment will result in higher D&A but partly offset by lower 2G amortization +10% Bt18.6n Bt0.9bn 3G 2.1GHz license Bt0.9bn The value of 2G network assets amortization will be depleted in FY15 >Bt6bn 3G 2.1GHz networks Bt6bn depreciation Bt8.7bn 2G assets Bt8.7bn Bt12bn amortization Bt0 SG&A >Bt0.3bn Bt0.3bn FY14 FY15 depreciation FY14 FY15 Asset under BTO (2G assets) 16
Tier pricing – volume base Fair usage policy: no real unlimited data offers Throttling Wifi Voice Monthly fee Data (minutes) Bt199 500MB 100 128Kbps - FUP Bt299 750MB 128Kbps 120 FUP 750MB Bt399 150 128Kbps FUP 3X data usage for first 6 months Special short-term discount Bt599 1.5GB 128Kbps 300 FUP Bt799 2GB 400 128Kbps FUP Bt999 3GB 256Kbps 500 FUP 17
Prepaid on-top packages for mobile data Package Internet Throttling Validity Bt 59 - 7 Days 140 MB Bt 99 - 7 Days 600 MB Bt 249 - 7 Days 2 GB Bt 199 - 30 Days 300 MB 3X data usage for term discount first 3 months 1.5 GB Special short- Bt 399 128 kbps 30 Days FUP 3 GB Bt 699 128 kbps 30 Days FUP 4 GB Bt 799 256 kbps 30 Days FUP Package Internet Validity Line 7 Days Bt 19 Facebook 7 Days Bt 29 BeeTalk 7 Days Bt 19 Kakao 7 Days Bt 19 18
More varieties of mid-low tier smartphone in the market International brand Sony Sony LG Samsung Samsung Huawei HTC Nokia Apple Rex 60 Ascend Y520 Desire 310 Xperia C3 Lumia 830 Z1 G3 Galaxy Note 4 iPhone 6 Plus New entry brand Wiko Cherry ASUS Vivo Alcatel Lenovo Oppo Vivo Lenny Paradin Plus Fonepad7 X3S Onetouch Vibe Z Find 7a Xplay 3S Operator’s brand AIS Dtac Dtac True True LAVA G Joey jump Lion Beyond SMART Local brand J-Phone J-Phone i-Mobile i-Mobile Alpha 3G Omega 3G IQ 6.3 IQ X-Ken Bt37,300 Bt10,000 Bt15,000 Bt20,000 Bt1,490 Bt5,000 19
Strong free cash flow to support dividend 1Q15 Cash flow (Bt mn) Operating Investing Financing Net cash 17,175 9,161 7,165 798 145 Operating Income tax Finance CAPEX Cash cash flow paid cost increased Cash Cash inflow outflow Interest-bearing debt Foreign • all floated • fully hedged 20.3bn 16.6bn Bt11.2bn Bt36.4bn (30%) -0.5bn 100% Bt25.7bn LT debenture net swap (70%) Avg interest rate borrowing and forward of 4.4% p.a. Local receivables all fixed 20
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