True Corporation

True Corporation Plc (TRUE)
Investment thesis: Following the 1Q12 results meeting, we remain concerned about the legality of the Hutch deal, given that the NACC and the NBTC will release the conclusions their respective investigations in June-July. We continue to rate TRUE a HOLD, premised on the legal risk associated with the Hutch deal and because we expect operations to weaken in FY12-13, due to buildout costs for the new network.
Final NACC recommendation in June: National Anti-Corruption Commission (NACC) investigators will submit their findings on the Hutch deal to the NACC in June. The commission will then decide whether or not to recommend legal action. In the meantime, the former CEO and board of CAT have until June 12 to present their side of the story top investigators.
Suspension of TRUE Move-H network rollout? CAT’s board recently resolved to halt the 850MHz services of both TRUE Move-H and “My” (CAT’s CDMA network). Mr Supachai Chearavanont, the CEO of TRUE, said he hasn’t yet received any order from CAT to suspend the Move-H service. With regard to the news that the NBTC will halt issuing new numbers for TRUE Move-H, he claimed that TRUE Move-H has 1.8m numbers, sufficient through 2Q12. However, if no new numbers are issued, TRUE Move-H’s aim of breaking even by YE12 at 4m subscribers would seem unlikely.
A strong interest in 3G-2.1GHz auctioning: TRUE is keen to bid for 2.1GHz bandwidth when the NBTC puts 3G licenses up for auction. Mr Supachai said that the firm is now looking for a strategic partner rather than a financial partner. 
TRUE Visions and Mobile to improve in 2Q12: Management claims that TRUE Move-H’s blended ARPU will trend up on heavier data usage, after its blended ARPU fell sharply 15% QoQ (to Bt634) as a result of pre-paid subscriber expansion. However, after migrating 1m premium subs from TRUE Move to TRUE Move-H, the post-paid sub proportion and blended ARPU will rise in 2Q12. With regard to TRUE Visions, the gradual migration from the MPEG2 standard to MPEG4 has facilitated an additional sub gain of 100K to Gold and Platinum packages, hence, a higher blended ARPU.