Financial Results 3Q16
Advanced Info Service Plc.
8 November 2016
3Q16 Executive summary
• Service revenue (excluding IC) momentum improved to 2.2% YoY and 1.5% QoQ in
3Q16, underpinned by improved 4G speed and footprints, reaching 65% of population
coverage, amid intense market competition.
• Fixed-broadband business, continued to expand to 3mn homepass in 28 cities, and
recorded195K subscribers at ARPU of Bt498.
• In 3Q16, EBITDA decreased 13% YoY and 10% QoQ from active marketing campaign,
handset subsidy and TOT payment. EBITDA margin stood at 41.1% in 3Q16.
• Aggressive handset campaigns to acquire and retain subscribers reflected in
negative sales margin ( -16%) and higher marketing spending.
• Toward partnership deal with TOT, AIS started paying monthly rental for tower and
equipment (Bt1.4bn/quarter) from 3Q16 and expected to record the cost for 2100MHz
commercial trial agreement in 4Q16.
• 9M16 service revenue (excluding IC) improved 0.2% and aligned with the full year
guidance. The fast network rollout resulted in high capex (Bt37bn vs Bt40bn guidance).
EBITDA margin was 41.2%, above the FY16 guidance of 38-39% while market
competition would be the pressure toward year end.
2
3Q16 Financial Highlights
Bt mn 3Q15 2Q16 3Q16 % YoY % QoQ 9M15 9M16 %YoY
Service revenue ex. IC 29,956 30,169 30,626 ▲ 2.2% ▲1.5% 90,734 90,944 ▲0.2%
Sales revenue 5,356 4,882 5,064 ▼5.5% ▲3.7% 19,376 15,609 ▼19%
Total revenue ex.
Construction 36,769 36,482 37,096 ▲0.9% ▲1.7% 115,429 110,830 ▼4.0%
Cost of service ex. IC (13,124) (11,309) (13,537) ▲3.1% ▲20% (40,046) (37,538) ▼6.3%
SG&A (4,896) (6,460) (7,260) ▲48% ▲12% (14,448) (21,815) ▲51%
NPAT 8,616 9,596 6,529 ▼24% ▼32% 28,361 24,198 ▼15%
EBITDA 17,431 17,012 15,257 ▼13% ▼10% 53,572 45,684 ▼15%
EBITDA margin 47.4% 46.6% 41.1% ▼630bps ▼550bps 46.4% 41.2% ▼520bps
Sales margin -11.1% 2.3% -16.1% ▼500bps ▼1,840bps -0.8% -4.6% ▼380bps
Capex (8,765) (11,693 ) (13,236 ) ▲51% ▲13% (24,813) (37,031) ▲49%
EPS 2.90 3.23 2.20 ▼24% ▼32% 9.54 8.14 ▼15%
3
13.8 15.5 16.2
39.0 46.6
1.7 1.6 1.7 5.2 5.0
36 146 232 55
480 14.5 12.9 12.5
46.5 38.9
3Q16 Revenue Breakdown
Voice revenue Non-voice revenue FBB revenue
Inter revenues & others Net Sales & margin Net IC
Cannibalized voice revenue due to
rising smartphone adoption Growing data usage supported by
improved 4G network and smart
device availability
Expanded AIS Fibre footprints and
increased subscribers
Slightly improved QoQ from
international roaming revenue
(Bt bn) (Bt bn) (Bt mn)
Dropped due to lower IC revenue both YoY and QoQ
Attractive handset offerings to
acquire and retain customers
resulted in negative handset margin
4
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
-14% YoY
-2.8% QoQ
-16% YoY
+18% YoY
+4.7% QoQ
+19% YoY
+546% YoY
+59% QoQ +771% YoY
(Bt bn) (Bt mn) (Bt mn)
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
-1.5% YoY
+0.6% QoQ
-4.7% YoY
143 85 51
555
230
-64% YoY
-40% QoQ
-59% YoY
-595
114
-814
-157 -717
-11.1%
2.3%
-16.1%
-0.8% -4.6%
1.7 3.1 3.8 4.7
12.0
2.3 3.1 4.1 6.9
9.7
3.3 2.2 1.8
11.5 8.6
5.9 4.4 6.2
16.7 14.5
3Q16 Cost Breakdown
Regulatory fee D&A Network Opex
Marketing Admin & Staff Bad debt
Fully operated under license and
representing 5.8% to service revenue
in 3Q16
YoY, dropped from fully amortized
2G asset in 3Q15. QoQ, increased
from network expansion.
Started to pay TOT for use of towers &
equipment at Bt1.4bn/quarter in 3Q16
Aggressive handset campaigns and
mass advertisement to enhance
customer perception
(Bt bn) (Bt bn) (Bt bn)
Remained at manageable level Increased from higher staff cost
5
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
-47% YoY
-20% QoQ
-25% YoY
+5% YoY
+40% QoQ
-13% YoY
+82% YoY
+31% QoQ
+40% YoY
(Bt bn) (Bt bn) (Bt mn)
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
+121% YoY
+23% QoQ
+156% YoY
2.8 2.9 3.0
8.5 8.5
+7.5% YoY
+2% QoQ
+0.3% YoY
305 320 350
995 954
3.1% 3.2% 3.3% 3.5% 3.1%
% to postpaid revenue
EBITDA reflected continued investment on network and customer perception
3Q16– EBITDA (YoY)
15,257
(1,693) (219) (92) (2,348)
(71)
673 1,575 17,431
3Q15 Service revex.IC
Service costex.IC
Reg fee Net sales Net IC SG&A Others 3Q16
3Q16 – EBITDA (QoQ)
15,257 (929) (927)
(34) (796)
457 454
19
17,012
2Q16 Service revex.IC
Service costex.IC
Reg fee Net sales Net IC SG&A Others 3Q16
6
(Bt mn)
(Bt mn)
-13% YoY
-10% YoY
Savings from fully
operated under license
Handset subsidy and
marketing spending to improve
customer perception
Ramp up 4G network
and TOT payment
TOT payment of
Bt 1.4bn/quarter
starting from 3Q16
EBITDA and NPAT reflected continued investment
• Net profit dropped both YoY and QoQ from
higher finance cost and D&A.
• For 9M16, excluding one-time deferred tax asset
and USO fee booked in 1Q16, net profit would
dropped 12% YoY. mainly from softer EBITDA,
higher D&A and finance costs.
• In 3Q16, EBITDA declined both YoY and QoQ,
mainly from aggressive handset campaigns and
higher network opex and TOT payment starting
from 3Q16.
• For 9M16, EBITDA margin remained strong above
the FY16 guidance of 38%-39% while the
competition could be pressured toward year end.
7
EBITDA
17.4 17.0 15.3
53.6 45.7
Net profit
47.4% 46.6% 41.1%
46.4% 41.2%
EBITDA margin (%)
Bt bn
NPAT margin (%)
Bt bn
23.4% 26.3% 17.6%
24.6% 21.8%
8.6 9.6 6.5
28.4 24.2
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
-13% YoY
-10% QoQ
-15% YoY
-24% YoY
-32% QoQ
-15% YoY
3Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16
2.2 2.4 2.7 3.4
4.1
1.7 1.9 2.0 2.4 2.7
3Q15 4Q15 1Q16 2Q16 3Q16
• AIS recorded 39.9mn subscribers, representing
518k net additions. Net addition improved in both
postpaid and prepaid segments, supported by
attractive handset offerings.
• Postpaid customer base expanded to 16% of
subscriber base from 15% in 2Q16.
39.9mn subscribers, supported by both postpaid and prepaid segments
8
ARPU (Bt/sub/month)
MoU (min/sub/month)
VoU (GB/data sub/month)
postpaid prepaid
Subscribers (mn)
Net addition (‘000)
339 330 320 313 305 283 286 272 234 213
143 68
-19
400 296
-2,394
609 459 26
222
3Q15 4Q15 1Q16 2Q16 3Q16
5.4 5.4 5.4 5.8 6.1
32.4 33.1 33.5 33.5 33.8
630 612 608 608 597
192 195 194 188 186
postpaid prepaid
• Blended ARPU was stable QoQ at 248. Postpaid
ARPU declined from expansion to mid-tier segment
while prepaid ARPU declined due to migration of
high-tier customers to postpaid.
• As VoU continued to increase from higher smart
device penetration and improved 4G network, MoU
dropped from data cannibalization.
235
36
272
30
82
107
17 11 26 14 14
112
117
14
Assets Liabilities
Equity
cash
spectrum license
others
spectrum license
payable
interest-
bearing
debt*
others retained earnings
others A/R
PPE
B/S 3Q16
9M16 Cash flow 3Q16 Balance Sheet
*interest-bearing debt excludes net forward/swap receivable of Bt644mn
A/P
Net debt to EBITDA = 1.53x Bt13.8bn = Free Cash Flow • CAPEX to service revenue was at 41% from fast 4G networ
k rollout
Average finance costs = 3.0% Maintain investment grade credit ratings:
• Fitch: national rating AA+ (THA), outlook stable
• S&P: BBB+, outlook negative
9
Strong financial position supporting future investment
(Bt bn) (Bt bn)
51
9.6
37
13.3
35 37
5.6 8.1 1.0 1.0
Operating Investing Financing Net cash
Opera
ting
cash flo
w
Incom
e
tax p
aid
CA
PE
X
ST
loan
Cash
incre
ased
LT
loan
Div
idend
paid
Spectr
um
lic
ense
paym
ent
Paym
ent
of LT
borr
ow
ings
Oth
ers
• Higher leverage from investment to capture long-term
growth
ROE = 90% • Maintain efficient share capital and 100% payout
Interest bearing debt to Equity = 2.94x
• Strong financial position with ability to gear up to
support potential growth opportunity.
10
Lifted up 4G capacity and coverage
7.0 10.0
15.5
21.2
4Q15 1Q16 2Q16 3Q16
4G network expansion
(‘000 base stations)
1800MHz
license granted 2100x15MHz
1800x15MHz
900x10MHz
2100x15MHz
TOT partnership
Improved network capacity with Carrier Aggregation (CA)
3G 4G
4G
3G 4G
• 21.2k 4G base stations after first launch in
Jan-16 while strengthening 3G capacity.
• Achieved 65% 4G network coverage,
aligned with the 80% target for FY16
• Increased additional bandwidth to enhance network
competitiveness:
• Jul-16: secured 900MHz spectrum license
• Sep-16: entered into commercial trial
agreement on 2100MHz spectrum with TOT
• With additional bandwidth, we deployed 2CA/3CA
in some key areas. This allows better speed and
network utilization.
900MHz license
granted
3G 4G 2G
Handset Subsidy shifted to acquisition in
postpaid segment
11
• Handset migration campaign has been scaled
down after 2G service can be continued but
remained to protect market share.
• Handset subsidy focuses on smartphone for
postpaid segment with potential revenue
quality.
• Attractive discount or free phones with
contracted price plan are offered.
• Costs are reflected in higher marketing expenses
and more negative handset margin.
• Effectiveness of campaigns is reflected in higher
prepaid net add and continued postpaid net add.
26 222
400
296
2Q16 3Q16
Net additions ('000 subs)
Prepaid Postpaid
12
Exclusive contents on AIS PLAY & AIS PLAYBOX
• After first launch in Jan-16, we registered 1.2mn active users on AIS PLAY, and 172k active users on
AIS PLAYBOX, supported by exclusive contents.
• Building user base through partnership models, offering both live and on-demand exclusive contents on
AIS PLAY (mobile platform) and AIS PLAYBOX (home entertainment).
Reality shows
Live concerts & music shows
Exclusive contents
Mobile
Fixed broadband
Paralympic games
Olympics games
Multi platforms
TV Video on demand
Karaoke HooQ Sports
12,000 26,000
44,000
72,000
115,000
195,000
2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Fixed broadband
Continue to scale up business & coverage expansion
Power Home package
Higher speed at same price point
• More than 4 times faster sub
acquisition run rate per month when
compared to last year
• Aim for full coverage in Bangkok by
year end, with more homepass
13
Max speed
(download/upload) Monthly package
20/7 Mbps
No PLAYBOX
20/7 Mbps
50/10 Mbps
New customers Bt590 Bt750 Bt888
AIS postpaid subscribers get 10% discount
Bt531 Bt675 Bt799
Special for Serenade customers
- - Bt699
Cover 3mn homepass
in 28 provinces
Partnering with M.K. Real Estate Development to
offer one-year AIS Fibre service to customers
AIS Fibre subscribers
FY16 Guidance
14
9M16-Actual 2016 (Maintained)
Service revenue (ex IC) +0.2% YoY Slightly increase
Handset sales -19% YoY Decline
Handset margin -4.6% Negative margin
EBITDA margin 41.2% 38-39%
CAPEX Bt37bn Bt40bn
Dividend N/A 100% payout ratio
Disclaimers 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
Tel. +662 0295117
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