Investor Presentation Advanced Info Service Plc. September 2018 Ticker: ADVANC (SET) AVIFY (ADR) Add AIS IR LINE@
AIS: Digital Life Service Provider Lead and digitally transform in Grow stronger in Partner to offer differentiated “ Mobile ” “ Fixed broadband ” “ Digital service ” Mobile revenue market share Focused on FOUR key areas Subscriber market share (approx.8.6mn) 28% 48% 33% 2Q18 21% 2Q18 24% 7% Mobile Video 39% money 2Q18 breakdown prepaid postpaid Bt31bn Enterprise IoT Others 3% Business 4 th year of operation in 2018 19% 30% Voice 43% covering 50 key cities out of Mobile 81% 67% 57% data 77 provinces expect to cover 6mn homepass* Mobile revenue subs % to mobile 40.1mn out of total 21.5m households revenue Digital life service provider with convergence products Mark leadership in mobile data Aim to be a significant player in Pursue long-term growth with • Nationwide 4G/3G/2G coverage 2020 integrated services • Leverage existing nationwide fibre • Emphasize partnership & with focus on network quality • Focus on scale to maintain cost infrastructure ecosystem • Defensive value to core mobile • Leverage the large sub base and advantage business telecom infrastructure *Homepass is defined as a number of households within AIS fibre service area. This includes the homes that require additional investment i.e. port, last miles to be able to get connected. 2
AIS’ digital transformation toward 2020 1 2 3 4 5 Digital Enterprise Full Service NFV& Organization Convergence Segments Digitization Cloudification Transformation & CVM • Provide shops & • Move to ARPH • Expand revenue • > 90% cloudification • Data-driven Target 2020 • Improve revenue • Network services that contribution of organization & never sleep assurance and enterprise business virtualization ready culture add valued users for 5G • Digitize all • Data-driven • 5G future-proof • Organization New opportunities • IoT Strategy toward 2020 customer journeys networks readiness for analysis based • SME & R-SME digital disruption on customer • AI/Chatbots • Managed • IT legacy insights: • Leverage embedded into all Security transformed to • Bundle mobile, • Mobile Digital self-service Cloud-friendly capabilities and fibre & content channels Marketing network create synergies in via FMC architecture value chain • Maximize value • Deployment of supporting digital of contents in • AI for network OMNI channels business customer operation objectives retention and branding Please learn more about AIS’ digital transformation at http://advanc.listedcompany.com/wp.html/t/vdo/e/am2q2018 -en 3
1H18 Performance Snapshot OPEX and marketing expense under control Service revenue improved in all segments • Continued company- • Targeted handset (Bt bn) 1H18 1H17 wide cost optimization subsidies, offset by Service 66 cost related to FBB ▲ 7.9% YoY revenue 71 ▲ 11% YoY 36 33 (Bt bn) ▲ 3.1% YoY 12 13 10 12 61 Mobile ▲ 2.2% YoY 5.2 5.3 62 7.1 8.1 1.3 FBB 16 14 ▲ 64% YoY 2.1 5.0 4.4 3.5 1.2 2.9 Others ▲ 77% YoY 2.1 1H17 1H18 1H17 1H18 IC & IC & 2.2 Regulatory D&A N/W TOT & Marketing Admin & Equipment ▲ 98% YoY equipment… 4.3 fee Opex Others Others rental Back on profit improvement (Bt bn) • • Mobile grew with 4G FBB maintained quality ▲ 10% YoY adoption amid pricing acquisition amid intense • 47% EBITDA 34 38 pressure. competition margin , +280bps ▲ 7.6% YoY 16 15 • Paid Bt3.78/share as interim dividend, a • • Acquired CSL and 2100MHz agreements 70% payout ratio. invested in Rabbit effective since 1-Mar 1H17 1H18 • LINE-Pay, totaling Net cost of Bt3.9bn/year Bt4.2bn EBITDA NPAT 4
Revised FY18 Guidance FY18 guided items Revised Previous Rationale guidance guidance • Outlook in 2H18 remains competitive Core service revenue +5-7% YoY +7-8% YoY • Mobile growth continues to be driven by (service revenue excludes IC & equipment rental) 4G and postpaid adoption • FBB growth target maintains at 800,000 subscribers • Expect the market to remain cautious SIM & device sale Decline with Decline with and margin near zero near zero on handset subsidies margin margin • Effective marketing spending to achieve EBITDA margin 45-47% 45-47% (excludes equipment rental) quality growth • Continue to optimize and digitize operation and processes • Investment plan remains unchanged Cash CAPEX Approx. Bt35,000- • Expect lower cash outflow from (excludes spectrum payment) Bt25,000mn 38,000mn negotiation for longer payment term • Preserve financial health and flexibility Dividend policy Minimum 70% Minimum 70% payout ratio payout ratio for future growth 5
Leading spectrum position after acquiring 2x5MHz of 1800MHz Largest bandwidth of 120MHz (2x60MHz) under operation newly acquired 2100MHz 900MHz 1800MHz 2100MHz License License License Partnership with TOT 2x10MHz 2x20MHz 2x15MHz 2x15MHz Until 2025 Until 2031 Until 2033 Until 2027 newly De-risk and acquired Enhance New capacity remain with accretive customer financial value experience flexibility • 4G on contiguous 2x20MHz of 1800MHz and carrier • • • Turn on the carrier on Increase 4G speed for Ensure sufficient aggregate with 2100&900MHz existing network all customers and up to capacity until 5G for superior speed equipment 30% for non-CA commercialization or • Reduce CAPEX in long handsets next validate spectrum term acquisition • More than half of all spectrums allocated for 4G 6 = 5MHz block
Mobile: 4G & Postpaid remained key growth driver Revenue grew amid competitive pricing Growth driven by 4G and postpaid adoption Mobile revenue (Bt bn) 4G Penetration 50% 54% +1.3% YoY +2.2% YoY 46% 42% 39% +0.1% QoQ 62.4 60.1 Net subscriber addition (‘000) 1,000 31.2 31.2 30.8 330 500 235 227 206 163 Postpaid - 2Q17 1Q18 2Q18 1H17 1H18 Prepaid -161 -500 -233 -294 • Driven by postpaid segment -504 -523 • More popularity on fixed-speed price -1,000 2Q17 3Q17 4Q17 1Q18 2Q18 plan, pressuring ARPU Continue targeted handset subsidies % marketing spending 1) to revenue Postpaid Prepaid 7.7% 7.4% 5.8% 5.7% 5.5% 2Q17 3Q17 4Q17 1Q18 2Q18 • Focused on postpaid adoption • Short-run, tactical handset • Discounted handsets • Localized prepaid campaigns targeting campaigns focusing on with pre-determined competitive areas and segments new quality prepaids ARPU commitment 1) (Marketing expense + net handset sales) divided by total revenue 7
Mobile: Enhancing digital network and service Keep enhancing network and brand End-to-end online package for digital native users • NEXT G network , delivering 1Gbps, available to all android devices (v.7.0 up) • OOKLA guarantee Unlimited Simple 100% fastest network 2015- online 2018 • Build brand • End-to-end customer journey awareness of being • Order from website more digital and • Digital KYC younger • Pay via credit card • Online live chat and help ARPU (Bt) Data speed Voice 259 2Mbps 100 min 2018 Thailand IoT Solutions Provider of the Year • Rollout NB-IOT in key areas of all 77 cities +140 4Mbps • Collaborate with key business partners and +Bt50 for +300 6Mbps 100 min universities +640 10Mbps 8
FBB: Upselling fixed-mobile plan with 800k subs target Quality acquisition continued amidst competition • Focus on coverage in 50 key cities to build up 637 635 618 610 600 utilization rate 900 600 • ARPU slightly dropped 1.2% QoQ, despite pricing 623 700 572 521 competition, due to increasing FMC subscriptions 482 52 446 51 400 500 40 • Subscriber target by end-18 maintained at 800k 36 72 300 following more salesforce and improving brand 572 521 482 200 446 374 awareness 100 -100 - 2Q17 3Q17 4Q17 1Q18 2Q18 ~ 7% subscriber 3% revenue 50 cities FTTH market share Bgn sub ('000) Net add ('000) ARPU (Bt/month) contribution coverage Drive long-term quality customer portfolio via FMC • Continued to post valued bundling proposition to target increasing revenue per household Of 623k subscribers Power4 PACKAGE FMC, 20% AIS PLAYBOX 50/20Mbps Bt799 3-month free trial of world- class content Bt899 100/30Mbps Unlimited 4Mbps mobile SIM Bt1,099 200/50Mbps 100,000 APs of SuperWiFi Non-FMC, 80% 9
Digital service: growth in Enterprise & Consumer (I) On-going business integration to penetrate enterprise market Non-mobile, 30% 98.96% Drive growth in • Maintain scale and • EDS/leased line competitiveness • Data center • Delist completed on 26-Jul-18 • Cloud & ICT • Product & marketing alignments Solutions • Sales force optimization • Managed service • Upsell and cross-sell Mobile, 70% • Media leased line migration Current enterprise revenue composition Enlarge & capture enterprise demand via end-to-end service platform and carrier-grade infrastructure Revenue Synergy • Multi locations, multi-tier cloud & data center Cost Synergy • Corporate internet with cost advantage from economies of scale • Communication services & Business solutions • Operation End-to-end ICT solution and managed services i.e. cyber security, DRaaS, Efficiency DBaaS, BaaS • Online advertising & digital marketing leveraging large database • Regional hub and cross-border connectivity 10
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