Intouch Holdings

Intouch Holdings Plc 

 

Investment thesis 

We accompanied INTUCH management on domestic non-deal road show (NDR) and the overall client feedback was broadly positive, with more clarity on operational and regulatory issues. Management also provides greater lucidity on the mobile and satellite industry outlooks, including the 4G competitive climate, the 4G network deployment, the measures following the 2G SIM shutdown, the greater regulatory risks of Thaicom 8 and 9 and INTUCH’s other new businesses. 

Given recent market perceptions that JAS will be unable to make the 900MHz payment on 21 Mar, its share price has risen 18% YTD. As we maintain our stance that JAS will make the payment, we expect its share price to weaken and recommend that investors re-accumulate on its price weakness at the yield-support prices. As a yield play, its acceptable yield would be 7-7.5%, which implies a Bt50-53.50 support price range. INTUCH and ADVANC are our ICT top picks. 

Subscriber revenue loss on 2G-900MHz bandwidth factored in

ADVANC targets migration of 8m 2G users (out of 11m). Given the roaming scenario on JAS’ 900MHz spectrum (on TOT’s 2G network) and DTAC’s 2G-1800MHz spectrum and network, we think that it remains a big challenge for ADVANC to speed migration of another 3m to achieve the 8m target. It has migrated 5m 2G users to 3G handsets or 3G/4G licensed users (2-3m have received 3G/4G handsets, while 2m are awaiting 3G/4G handsets). Conservatively, we had factored in a Bt4bn 2G revenue gain, against its Bt8bn in total expenses for serving 2G-900MHz users. The NBTC will consider issuing the license to JAS on 15 Apr if JAS makes the 900MHz payment on 21 Mar, based on the recent court ruling granting the 30-day 900MHz grace period.

THCOM’s increased regulatory risks