By CIMB Securities (Thailand)
Thaicom Plc ( THCOM)
Press reports say that 60 digital TV channels will be introduced come FY13 and we believe Thaicom is best-positioned to benefit as demand for Thaicom 6’s transponders will grow. Fiercer satellite TV competition and the growing popularity of HD TV also bode well. We think the market underestimates the utilisation uptake for Thaicom 6. This may result in an earnings surprise in FY13, a potential catalyst. IPSTAR’s bandwidth sale and the divestment of Mfone should also boost investor interest. Thaicom is still one of our top Thai telco picks. Maintain Outperform, our estimates and DCF target price (11% WACC).
According to a local newspaper,Colonel Natee Sukulrat, the chairman of the broadcasting panel under the National Telecoms and Broadcasting Commission (NBTC), revealed that the commission aims to allot 470-890MHz spectrum in FY13, which translates into 60 digital
terrestrial TV channels. He clarified further that 36 licences will be awarded for commercial TV channels, 12 licences for public TV channels and the remaining 12 licences for community channels.
What We Think
It is premature to establish the winners and losers of the ongoing media liberalisation in Thailand from among the country’s TV operators, which range from incumbents like BEC, MCOT and True and new entrants like Grammy, RS and WORK. However, we conclude that TV liberalisation will ensure uptake demand for Thaicom’s new satellite (Thaicom 6) on the back of the 60 terrestrial digital TV channels, fiercer competition among satellite TV platform operators and the growing
popularity of high definition TV channels.
What You Should Do
We believe that the Thaicom 6 project’s potential has been somewhat overlooked and is a likely re-rating catalyst for the stock. We therefore maintain our Outperform call on Thaicom with a DCF-based target price of THB22.7, still based on 11% WACC and 0% LTG.