Post on 22-Sep-2020
Advanced Info Service company & mobile telecom
background
Dec 2015
52% 28%
20%
46%
31%
23%
Thai mobile industry
2
Key characteristics • Over 128% mobile penetration from total
population of 68mn
• Excluding multiple SIM users (approx. 35%), head-count penetration is around 83%
• Prepaid is dominant market, representing 86% of industry subscribers.
• Postpaid is accounted for 14% of industry subscribers.
• 2.1GHz spectrum licenses were granted to existing three operators in December 2012
• 1800MHz licenses were granted to AIS and TRUE in November 2015
AIS
AIS
A
A
B
B
Revenue market share
Subscriber market share
As of 3Q15
As of 3Q15
Industry structure
900 MHz 17.5MHz-Bandwidth
2100 MHz 15MHz-Bandwidth
1800 MHz 45MHz-Bandwidth
850 MHz 25MHz-Bandwidth
TOT
CAT
AIS 17.5MHz
AIS 15MHz
DTAC 45MHz
TRUE 15MHz
BTO contract
ends 2015*
ends 2018
License
ends 2015
License
ends 2025
License
License
ends 2025
M VNOs 15MHz
MVNO contract
Wholesale - Resell TRUE 15MHz
DTAC 10MHz
BTO contract ends 2018
2100 MHz 45MHz-Bandwidth
License
ends 2027
AIS 15MHz
DTAC 15MHz
TRUE 15MHz
Auctioned license NBTC Regulator
BTO contract
*The NBTC announced a temporary measure enforcing continued service to end after 900MHz auctions complete 3
1800 MHz 30MHz-Bandwidth
License
ends 2033
Current spectrum allocation
4
2100MHz License
1800MHz License
Low bands
15MHz 3G
5MHz 4G
10MHz 3G
10MHz 4G
5MHz 3G
15MHz, 4G to expire in 2033
20MHz, unused
25MHz, 2G to expire in 2018
15MHz, 2G and 4G
17.5MHz, 2G concession to expires in 2015
auction in December 2015
900MHz
850MHz
850MHz
10MHz, 3G concession to expire in 2018
15MHz, 3G contract to expire in 2026
all expire in 2027
to expire in 2033
Key milestones of Thai telecoms
5
1990 BTO contract • Telecommunications services in Thailand were provided exclusively through two state enterprises, i.e. TOT and CAT. The TOT’s primary responsibility was to provide domestic telephone service while the CAT focused on international services.
• The private operator could only operate business with the state enterprises in form of Build-Transfer-Operate (BTO) Contract. BTO contract started during early 1990s with the terms of 25-27 years.
Under BTO contract, mobile operator is entitled to
• Build and raise capital for investment in the cellular network • Transfer the network ownership to the grantor (TOT/CAT) • Operate the network and service commercially • Share revenue with the grantor of 20-30%
2000 Liberalized telecom industry
• Frequency Allocation Act B.E.2543 (A.D.2000) was enacted and stipulated the National Telecommunications Commission (NTC), an independent regulator, to be formed.
Key milestones of Thai telecoms
6
2010
2004 NTC • The first independent regulator, the National Telecommunication Committee (NTC), was formed and consisted of 7 members.
2007 Interconnection charge (IC)
Mobile Number Portability (MNP)
• Operators provide Mobile Number Portability Service (MNP) to enable customers to retain their mobile numbers when changing subscription from one operator to another.
• NTC established interconnection regulation. The three operators i.e. AIS, DTAC and TRUE signed IC contracts at Bt1/minute**. (**IC rate was changed to Bt0.45/min, started 1 July 2013)
Key milestones of Thai telecoms
7
2012 3G 2.1GHz licenses
2010 NBTC (license base)
• The new law of “Frequency Allocation Act B.E.2553 (A.D.2010) ” was enacted in December 2010. The law stipulated the new regulators called the national broadcasting and telecommunication commission (NBTC) to regulate the telecom and broadcasting industries.
• NBTC officially granted 3 licenses of 2x15MHz each on 2.1GHz spectrum to operators on December 7, 2012
• The license scheme includes upfront bidding fee and annual license fee paid to NBTC.
The NBTC commissioners • 11 members with expertise in telecommunications,
radio, TV broadcasting, education, culture, economics, public laws, security and consumer protection
• selected by the senate • 6 years term and shall not be re-appointed
2015 1800MHz and 900MHz licenses
• On November 25 and December 4, 1800MHz licenses were granted to AIS and TRUE respectively.
• 900MHz license auction took place on December 15.
BTO contract versus License
8
BTO* License
Grantor TOT/CAT NBTC
Period Till 2013-18 15 years
Asset ownership TOT/CAT Operator
Fee 20-30% revenue share
5.25% of revenue (Type 3 license)
What AIS has (1) 900MHz GSM contract with TOT (2) 1800MHz GSM with CAT (under
subsidiary DPC)
(1) IDD license (under subsidiary AIN)
(2) Fixed line/ISDN/data (under SBN)
(3) Fixed-wireless broadband/fixed & wireless network (under AWN)
* BTO is Build Transfer Operate contract Note: Operators have to pay a numbering fee at Bt2/number/month to the regulator
Fee structure BTO contract
9
=
=
+
Revenue share
Access charge
BTO contract Regulatory fee
+ was ceased since 2007
=
Effective 24.7%
AIS 20% prepaid
30% postpaid
30% 18% prepaid
Bt200/month postpaid
AIS
DTAC
True Move
DPC
paid to TOT
paid to CAT
paid to TOT
Fee structure license system
10
*Type 3 license is categorized by NBTC as facility-base (require investment in network infrastructure e.g. fixed-line, mobile, IDD). The other two types of licenses (e.g. ISP) are subject to different fee structure.
+
Annual license fee
USO fee Type 3 License* fee
=
paid to NBTC
1.5% 3.75%
paid to NBTC
5.25%
Upfront license bidding cost
Bt13.5 - 14.6bn Bt39.8 – 41bn
for 2x15MHz of 2.1GHz license
for 2x15MHz of 1800MHz license
11
• AIS, DTAC and TRUE agreed to pay IC rate at Bt1/minute.
Interconnection charge (IC) or termination charge is a bi-lateral agreement charge levied by network operators on other service providers to recover the costs of the interconnection facilities provided by the network operators.
Interconnection charge
2007
2013 Bt0.45/ minute
Bt1 / minute
• The new IC rate of Bt0.45/minute was applied from 1 July 2013.
AIS
DTAC TRUE
Interconnection charge
2015 Bt0.34 / minute • The new IC rate of Bt0.34/minute was applied from 1 July 2015.
12
Roaming happens when one operator allows its customers to originate/receive traffic using network of other operators. Roaming ensures that customers have seamless connection experience.
National roaming
provide roaming service
• subscriber uses 2G handsets
• subscriber makes/receives a call outside of 3G coverage
3G company License base
2G company BTO contract
pay roaming charge • Provide network capacity
to support traffic originated/received from customers of 3G company.
• subject to 30% revenue sharing to TOT/CAT
13
• NBTC stipulated the price ceiling for voice service at average of Bt0.45/minute since 2013.
• The price cap mandate stipulated for the Significant Market Power (SMP) i.e. AIS and DTAC.
Key recent regulations
Infrastructure sharing
Price cap
• NBTC announced the mandate for network infrastructure sharing among operators i.e. tower, land, site facilities, etc. in April 2013.
• The action is subject to availability of network capacity.
• In compliance with NBTC mandates • Customer gets minimum 30 days balance for every
prepaid top-up value. • The value can be accumulated for 365 days.
Prepaid validity
Prepaid Identification
• Since 1Q15 NBTC asked prepaid customers to come to register their identification to prevent potential frauds. Prepaid customers who didn’t register by July-15 would be unable to continue their service.
AIS Background
14
AIS moving toward Digital Life Service Provider
15
3G-2.1 GHz • 97% population coverage • 23,800 BTS as of 2Q15 and
target 29,000 BTS in FY15
4G-1800MHz auction • Expected to be in
4Q15
Fixed broadband • Official launch in 1Q15 • Invest Bt1bn in FY15 for 250k
capacity • Technology FTTH and VDSL • Target 80,000 subscribers
Rationale • Moving toward convergence • Leverage from our fiber optics • Demand for better technology • FBB penetration rate is still low
(24%)
Digital content • New source of revenue • Support mobile and fixed broadband
business • Partnership model
Digital Life Service
Provider
Digital content
52% revenue market share 37m 3G-2.1GHz users
3G 95%
2G 5%
Voice 44%
Non-voice 47%
IR 2%
Others 7%
Breakdown of customers Breakdown of Service Revenue
No.1 mobile operator in Thailand
38m users
Quick introduction
• Officially launched 3G-2.1GHz service in May-13 and expanded coverage to all 77 provinces with 97% population coverage under a 15-year license of 2x15MHz bandwidth.
• 4G service on 1800MHz, under the new spectrum license, is expected to be commercially launched in January 2016.
• Provide nationwide 2G network on 900MHz under Built-Transfer-Operate contracts which expired in Sep-15.
• The 900MHz remedy will be until the auction is completed in December 2015.
AIS at a glance
16
Data as of 3Q15
Pushing varieties of 3G and 4G handsets into the market
17
AIS OLA POP 690 Baht
LAVA B 3.5" 1,690 Baht
• LAVA 4G smartphone was launched in Se
ptember 2015.
• Price range Bt2,490 – 7,290
3G handset for trade-in campaign New LAVA 4G smartphone
• Only for AIS customers
• Trade-in 2G phone with new 3G
phone with Bt200 top-up
• Get new 3G feature phone for free
or new 3G smartphone at low prices
• Lava + OLA sales were 1.9mn units in 3Q
15, compared to 2.5mn units in FY14
LAVA 4.0" 2,190 Baht
AIS subscriber base
18
Data users (% to total subscribers)
27% 34% 34% 45% 54%
Smartphone penetration
12% 17% 27% 38% 53%
44.3
20
Data users
Total subscribers
41.0
14
35.7
12
33.5
9.0
Million subscribers
FY11 FY12 FY13 FY14 3Q15
37.8
20
AIS brand positioning
19
Postpaid
White collar
youngster
Prepaid
young professional
Tech savvy
High value customer
Light user Basic user
Focus on quality in all dimensions to serve individual needs
Basic users
Pre-teen
Distribution channels
20
460+ exclusive dealers (telewiz)
Refill on Mobile
eService
ATM
mPay Auto Topup
+ 400,000 electronic top-up channels
Nationwide physical channels
10,000+ sub dealers & modern trades 80% of top up value paid through
electronic channels
90+ AIS Shops
800+ Green Smile Shop
2015 targets
Q-DNAs: Quality in all dimensions
21
Device
Network
Application
Service
Deliver superior quality to maintain leadership
Bringing full range of best-in-class quality devices
to customers
Providing the largest and widest coverage of
high quality networks
Ensuring delightful customer experiences
through every touch points
Delivering quality applications that amuse, entertain, raise productivity
at work or at play
Free Google Internet Google Free Search, Chat, Plus
Unlimited Social Life FB, Whatsapp, LINE Package
myCloud Store your digital assets
PhotoBox Discover photos that matter
mySticker Shop 1000+ LINE Stickers
Calling Post Express feeling on the phone
Newsloop Discover the best of Thailand and the world
Music Store (HD) 50k+ HD music & concerts
Movie Store (HD) The largest movie store
Live TV 30+ Live TV channels
Bookstore The largest Thai e-bookstore
Privileges App Discover nearby privileges
mPay MasterCard Online shopping for everyone
Guide & Go World first Social Navigator
mPay Rabbit Bring convenience to mass transit and beyond
Social Life Fun Life Local Life
Game Zone Unlimited Game Play
22
GMMz on AIS Entertainment
AIS On Air English Premier league
Keep strengthening the best 3G network at world standard
23
2013
2014 97% population 21,300 BTS
80% population 77 provinces
Bt36bn capex in 2015
• build a stand-alone network to better position for long-term growth • New radio/core networks/transmission • Some new towers
3G 2.1GHz network plan
May-13 20 provinces 3,500 BTS
97% population 19,300 BTS
1H14
2015F 97% population 29,000 BTS
• commence fixed broadband business
• expand more shops to increase customer touch points • new guidance of CapEx is lower
because some payments were deferred and some projects were delayed
Integrated mobile operator
24
To utilize benefits of each technologies based upon optimization framework
3Q15 Key financial highlights
25
1) 900MHz-BTO refers to the subscription of customers under 900 & 1800MHz Build-Transfer-Operate contract 2) 2.1GHz-License refers to the subscription of customers under 2.1GHz license issued by NBTC. The subscribers who are holding 2G devices have to roam on the 900MHz network.
Bt million 3Q14 2Q15 3Q15 % YoY % QoQ 9M14 9M15 %YoY
Service revenue ex. IC 29,382 30,468 29,956 ▲2.0% ▼1.7% 87,953 90,734 ▲3.2%
Sales revenue 4,208 5,733 5,356 ▲27% ▼6.6% 14,878 19,376 ▲30%
Total revenue ex. construction 35,355 38,123 36,769 ▲4% ▼3.6% 108,284 115,429 ▲6.6%
Cost of service ex. IC 13,385 13,217 13,124 ▼1.9% ▼0.7% 40,254 40,046 ▼0.5%
Total SG&A 4,643 4,876 4,896 ▲5.5% ▲0.4% 13,792 14,448 ▲4.8%
EBITDA 16,442 18,068 17,431 ▲6% ▼3.5% 48,701 53,572 ▲10%
Consolidated EBITDA margin 46.5% 47.4% 47.4% ▲90bps flattish 45% 46.4% ▲140bps
Service EBITDA margin 53.1% 55.4% 57.4% ▲430bps ▲200bps 52.1% 55.9% ▲380bps
Sales margin -2% 2% -11.1% ▼910bps ▼1310bps 0.2% -0.8% ▼100bps
Capex 10,236 8,883 8,765 ▼14% ▼1.3% 25,696 24,813 ▼3.4%
EPS 3.01 3.31 2.90 ▼3.8% ▼13% 9.05 9.54 ▲5.4%
Disclaimers
26
Some statements made in this material are forward-looking statements with the relevant assumptions, which are subject to various risks and uncertainties. These include statements with respect to our corporate plans, strategies and beliefs and other statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “intend”, “estimate”, “continue” “plan” or other similar words. The statements are based on our management’s assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Please note that the company and executives/staff do not control and cannot guarantee the relevance, timeliness, or accuracy of these statements.
AIS INVESTOR RELATIONS http://investor.ais.co.th
investor@ais.co.th TEL. +662 0295117