TrueMobile poised for larger share
Fitch Ratings expects competition in the Thai mobile telecommunications industry to intensify. True Corporation's mobile business, TrueMobile, the third-largest operator by service revenue, has strengthened its financial profile and aims to gain market sh
Meanwhile, Total Access Communication (DTAC), the second-largest operator, is likely to come under pressure as it continued to lose market share in both voice and non-voice services to market leader Advanced Info Service (AIS) and TrueMobile last year. In the first quarter of this year, DTAC’s market share in voice was 28.2 per cent and non-voice 29.5 per cent, falling from 29.3 and 32.9 per cent respectively in the first quarter of 2014.
Fitch expects revenue in the saturated voice market to contract by 10-15 per cent in 2015, compared with a 12-per-cent contraction last year. The competition will remain intense as TrueMobile aims to gain market share upcountry, where voice services still dominate.
This upcountry strategy has helped TrueMobile narrow the gap with the top two. TrueMobile’s voice market share improved by 190 basis points year on year to 17.7 per cent in the first quarter of this year at the expense of AIS and DTAC, which saw their voice-revenue market share fall by 50bps and 140bps respectively during the period.
Fitch expects all operators to continue to compete aggressively on data pricing and handset promotions to increase data usage, which will be the industry’s key growth driver in the medium term.
AIS is likely to benefit most from rising data usage given its superior network quality. AIS invested heavily in its third-generation network over the past two years, and has strengthened its competitive position in non-voice service, even though it does not offer 4G services.
AIS’s non-voice revenue grew strongly by 33.7 per cent year on year in the first quarter this year, faster than the industry’s average expansion of 26.7 per cent, while its non-voice-revenue market share improved by 260bps to 50.5 per cent from 47.9 per cent in the same period last year.
Although TrueMobile has narrowed the gap on market share with its competitors, its earnings and profitability will remain significantly weaker than those of its peers. This is mainly because of the company’s relatively higher costs due to its smaller size and high marketing expenses.
TrueMobile’s EBITDA (earnings before interest, taxes, depreciation and amortisation) margin (net of network rental revenue) was weak at 12.2 per cent for the 12 months to March, compared with 44 per cent for AIS and 33 per cent for DTAC.
