Advanced Info Service

Advanced Info Service Plc (ADVANC)

What’s new? Mr Panthep Chamrasromran, TOT chairman, said the state telco is in talks with ADVANC, its cellular concessionaire, over the evaluation of ADVANC's existing mobile assets before entering into a network-sharing agreement with the private operator. TOT plans to set up two new companies—a tower owner and a fiber optic network operator—and list the two firms on the SET (TOT would be the major shareholder in both companies). TOT will hire a consultant to evaluate ADVANC's 900MHz BTO assets of 12,000 base stations. The evaluation will be completed in six months.
In a separate development, TOT will appoint a consultant to design the second phase of a nationwide 3G network rollout of an additional 15,000 base stations worth Bt30bn and a planned 4G network. It is in talks with the NBTC to return half of its 64MHz of bandwidth of the 2.3GHz spectrum to the NBTC; it will keep 32MHz for a 4G wireless broadband project for which it will seek a strategic partner.
Mr Somprasong Boonyachai, INTUCH's CEO, met TOT to discuss the possibility of being MVNO on TOT's 3G second phase and on its planned 4G service.
Psychologically positive: The above news of the planned network-sharing business model is psychologically positive for ADVANC. We see two potential benefits: 1) it would have first right-of-use to the 900MHz-BTO assets and 2) an equity stake in the TOT’s planned SET-listed tower company could add incremental network rental revenue. Discussions are at preliminary stages and will take a long time to conclude.    
Future access to TOT’s 2.3GHz bandwidth: We believe that ADVANC is likely to get first refusal on a TOT 4G investment partnership. Access to TOT’s 2.3GHz bandwidth would potentially a valuable asset.
Action: We reiterate our BUY rating on ADVANC, premised on a series of 3G developments, strong FY12 earnings and a moderate dividend yield. We plan to upgrade our YE12 target price soon.