DTAC banks on more network investment for higher return

He said the telecommunications sector was less affected than other industries by the downturn, since more and more people were consuming wireless data service.

Around 50 per cent of DTAC’s subscribers use mobile Internet, a level that is expected to grow to 60 per cent by the end of the year, he said.

“We still expect to see low single-digit growth in our revenue this year, higher than what we achieved last year,” he added. 

According to a telecom analyst, DTAC last year experienced a 3.3-per-cent decline in service revenue (excluding interconnection revenue) to Bt68 billion, while its competitors – Advanced Info Service (AIS) and True Move H – saw 1.3-per-cent and 9.1-per-cent revenue growth to Bt117.9 billion and Bt38.4 billion, respectively.

DTAC recently revised upwards its capital-expenditure guidance for this year to between Bt18 billion and Bt20 billion from the previously announced minimum of Bt14 billion, as part of its stated ambition to become the country’s leading mobile Internet service provider.

Most of the revised capex will be used to enhance the capacity of its fourth-generation service and to expand the coverage of its 3G network to 95 per cent of the population. 

According to the same telecom analyst, this larger capex plan is a step in the right direction for DTAC.

The analyst believes the company’s main problem is network underinvestment, and he therefore welcomes the expanded capex plan, which is expected to enhance top-line growth and reduce DTAC’s handset-subsidy cost.

However, in contrast to its rivals, DTAC is investing in both its network asset of 850MHz/1,800MHz under its CAT Telecom concession, which requires lower capex but carries a 30-per-cent regulatory fee, and its 2.1GHz network asset under a National Broadcasting and Telecommunications Commission (NBTC) licence, which is capex-intensive but carries a much lower regulatory fee of 5.25 per cent. 

This means DTAC needs to strike a balance between the two kinds of assets in order to maximise profitability, the analyst explained.

The analyst considers DTAC’s plan to allocate additional bandwidth to boost its 4G service capacity as a contingency plan in the event that the NBTC’s auctions of new spectra are delayed further from the current schedule of late this year. 

Norling said DTAC would definitely take part in the upcoming auctions, but would like the regulator to add more spectra to what was currently on offer.

DTAC utilises 5MHz of bandwidth on the 2.1-gigahertz spectrum to offer 4G service. To boost 4G service capacity, it will allocate 10MHz of the 25MHz it holds on the 1,800MHz spectrum, giving it a total of 15MHz for 4G.

The operator needs CAT’s approval to upgrade the use of 1,800MHz to provide 4G service.

The NBTC will put four licences up for auction, two of 12.5MHz each on the 1,800MHz spectrum and two of 10MHz each on the 900MHz spectrum.

It plans to hold the 1,800MHz auction in November, and take bids for the two 900MHz licences the following month.