dtac - listed companydtac.listedcompany.com/misc/FS/2012/20121019-DTAC... · Network swap completed...

dtac third quarter 2012

19 October 2012

disclaimer

Certain forward looking statements may be made in the course of the presentation. These forward-looking statements generally can be identified by

use of statements that include words or phrases such as dtac or its management “believes”, “expects”, “anticipates”, “intends”, “plans”,

“foresees”, or other words or phrases of similar import. Similarly, statements that describe dtac’s objectives, plans or goals also are forward-looking

statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from

those contemplated by the relevant forward-looking statement. The forward-looking statements contained in the slides are not and should not be

constructed as representations of the future performance of dtac and that such statements are an expression of the Company’s reviews based on its

current view and certain assumptions including, but not limited to, prevailing economic and market conditions and currently available information.

key highlights

Strong net adds (54% QoQ) and 3G subscriber growth (40% QoQ)

Solid data revenue growth continued (83.2% YoY)

Voice revenue still under pressure compensated by data revenue

growth

3G 850MHz network expansion (3,500 site) and 2G network swap

(70% completion) progressing according to plan

3

highlights operational

300 283 283 278 273 281

Q211 Q311 Q411 Q112 Q212 Q312

262 265

269 271 269 268

Q211 Q311 Q411 Q112 Q212 Q312

blended MOU* (mins / month / sub)

subscribers reached 24M driven by strong net adds

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 5

Innovative marketing and retention

campaigns drove strong net adds in Sep’12

MOU rose QoQ driven by complimentary

minutes from Happy BD campaign and

Aug’12 network compensation

ARPU improved YoY from data growth but

slightly declined QoQ due to the above

given MOUs and higher prepaid bonus

blended ARPU* (THB / month / sub)

-0.5% +3.1%

+1.1% -0.4%

* Include IC

* Include IC

384

136 352

218 167 257

22.7 22.9 23.2 23.4 23.6 23.9

Q211 Q311 Q411 Q112 Q212 Q312

Net add (in thousand) Accum subs (in million)

subscribers

strong data growth continued

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 6

data subscribers (million)

3G subscribers (million)

smartphone penetration

Social network and smartphone adoption

are key growth drivers for rising data

demand

Data and 3G subscribers grew significantly

after the launch of 3G 850MHz in Aug’11

and continued network expansion

22.7 22.9 23.2 23.4 23.6

23.9 13.2% 14.2% 15.5%

17.0% 18.2% 20.5%

Q211 Q311 Q411 Q112 Q212 Q312

Accum subs (in million) Smartphone penetration

5.2 5.5 5.6 6.1 6.5 7.2

Q211 Q311 Q411 Q112 Q212 Q312

+30.5% +9.7%

n/a 0.3

0.5

0.8 1.1

1.6

Q211 Q311 Q411 Q112 Q212 Q312

+526.9% +40.1%

dtac launched 3G service in Aug 2011

7

Network

Network swap completed in

Bangkok and Southern region

Launched WiFi to offload data traffic

from 2G and 3G 850MHz network

3G 850MHz

3,500 sites

Nationwide network swap

and 3G 850MHz 5,000 sites

Q112 Q212 Q312 Q412

Distribution

Strengthen device supply

chain mgmt thru exclusive

partnership with Brightstar

Service outlet revamp to

be more retail-oriented

Organization

Leadership development

program to strengthen

people capabilities

Organization optimization

to build a strong platform

for future growth

IT System

BI and customer analytic

capabilities enhancement

continuous efforts for improved customer experience

financial

highlights

revenue growth continuously driven by VAS

quarterly revenues (THB billion)

18.0 18.4 18.8 19.2 19.2 19.4

1.7 1.1 1.5 3.3 2.4 1.8

19.7 19.6 20.3 22.5 21.6 21.2

Q211 Q311 Q411 Q112 Q212 Q312

Service revenue (incl IC) Handset & others

service revenue breakdown

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 9

+8.2% -2.1%

15.0% 15.3% 14.8% 13.8% 14.1% 13.9%

45.5% 45.0% 44.7% 43.7% 42.1% 40.9%

13.2% 14.0% 15.4% 17.4% 18.6% 19.8%

3.0% 2.9% 2.4% 2.4% 3.0% 3.0%

20.0% 19.5% 20.4% 19.4% 19.1% 18.6%

3.3% 3.3% 2.2% 3.3% 3.1% 3.8%

Q211 Q311 Q411 Q112 Q212 Q312

Postpaid airtime Prepaid airtime VAS IR IC Others

solid revenue growth from mobile data

VAS revenue (THB billion)

2.4 2.6

2.9 3.3

3.6 3.8

13.2% 14.0% 15.4% 17.4% 18.6% 19.8%

Q211 Q311 Q411 Q112 Q212 Q312

VAS revenue % to service revenue (incl IC)

VAS breakdown

47% 50% 53% 56% 59% 62%

25% 23% 23% 23% 20% 18%

28% 26% 24% 21% 21% 20%

Q211 Q311 Q411 Q112 Q212 Q312

Mobile Internet Messaging Others

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 10

+48.6% +7.5%

declining handset margin due to intense competition

handset revenue (THB billion)

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 11

1.5

1.0 1.3

3.1

2.3

1.6

10.0% 7.2%

4.9% 6.2% 2.2% 1.9%

Q211 Q311 Q411 Q112 Q212 Q312

Handset sales % handset margin

+64.6% -29.4% Growth of handset sales in 2012 was

mainly driven by the launch of iPhone 4s

in Dec’11 and android sales but softened

QoQ in expectation of new iPhone model

2013 onward, expecting handset margin

to maintain low with increasing sales

revenue sharing pressured cost of services

cost of services (THB billion) excluding amortization & depreciation

8.9 9.1

10.3 10.3 10.4 10.7

49.9% 49.4% 54.9% 53.7% 54.4% 55.0%

Q211 Q311 Q411 Q112 Q212 Q312

Cost of services % to service revenue (incl IC)

% to service revenue (incl IC)

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 12

+17.1% +2.1%

4.2% 4.3% 4.6% 4.4% 4.9% 5.1%

5.4% 5.2% 5.5% 4.9% 5.2% 5.4%

21.7% 22.1%

25.8% 26.0% 26.3% 26.9%

18.6% 17.8% 19.0% 18.4% 18.1% 17.6%

Q211 Q311 Q411 Q112 Q212 Q312

Network Opex Other cost

Regulatory cost IC cost

decreased SG&A from lower selling

and marketing expenses

SG&A (THB billion) excluding amortization & depreciation

2.4 2.5 2.5 2.5 2.3 2.2

13.3% 13.5% 13.5% 12.9% 12.1% 11.5%

Q211 Q311 Q411 Q112 Q212 Q312

SG&A % to service revenue (incl IC)

% to service revenue (incl IC)

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 13

-11.0% -4.2%

9.7% 9.1%

9.7% 8.9% 8.8% 8.8%

3.5% 4.4%

3.8% 4.0% 3.3%

2.7%

1.5% 0.3% 0.3% 0.8% 1.4% 1.2%

Q211 Q311 Q411 Q112 Q212 Q312

Admin excl A&D as % to service revenues

Selling and marketing expenses as % to service revenues

Bad debt as % of postpaid revenues

maintained bottom line despite pressure

from higher revenue sharing

EBITDA (THB billion)

6.9 7.0

6.1 6.8 6.6 6.7

35.0% 35.4% 29.8% 30.1% 30.6% 31.4%

Q211 Q311 Q411 Q112 Q212 Q312

EBITDA EBITDA margin

net profit (THB billion)

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 14

-5.1% +0.4%

3.0 3.1

2.4

3.0 2.8 2.9

Q211 Q311 Q411 Q112 Q212 Q312

-6.3% +1.9%

EBITDA dropped YoY mainly from

higher revenue sharing

7.0 6.7

0.9

0.3

0.1 0.05

1.1

0.2 0.1

Q311 Service rev

excl IC

Net IC Handset

margin

Regulatory

cost

Network

opex

SG&A Others Q312

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882 15

(THB billion)

continued healthy financial position

6.0 5.5

3.0

6.0 4.4

2.5

0.9 1.5

3.1

0.7 2.2

4.1

Q211 Q311 Q411 Q112 Q212 Q312

Operating FCF (EBITDA - CAPEX) CAPEX

operating FCF (THB billion)

THB 16.1 billion cash on hand

at the end of Q312

To pay interim dividend of

THB 2.7bn

Committed bank loan and

bank guarantee facilities

secured

16

debt repayment (THB billion)

21.9

2.7 0.0 2.7 0.0 2.1

14.5

Interest bearing debt Repayment

financial ratios

0.4 0.3

0.2

0.6 0.4

0.2

36.7 46.2 69.1 51.9 44.6 35.8

193.8

327.5 389.6

151.7 178.4 205.5

Q211* Q311* Q411* Q112 Q212 Q312

Net debt to equity

Net debt to EBITDA

Interest coverage ratio

FFO to total debt (%)

* net cash position

OE governance structure approved

OE committee formed to set direction and oversee overall implementation of the program

CFO responsible for driving the overall OE program

CXOs accountable for driving the implementation of OE projects in own and cross-functional areas

operational excellence program started in 2012

Way of Work Governance

Company-wide approach

Top-down target setting together with tactical bottom-up planning

Clear ownership and accountability assigned

CXOs endorsement to ensure successful implementation

Regular progress tracking and reporting to OE committee

17

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882

18

Extensive analysis to identify major

addressable cost optimization areas

Network Opex

SG&A excluding A&D

Other operating costs

Use % addressable cost to service

revenue in 2011 as a baseline (22.8% )

Savings from some OE initiatives

have been realized YTD

But expecting to increase in Q412

Disclaimer: Not yet including the effect of 2.1 GHz, we are not in the position to give any guidance at this point.

operational excellence targeting major cost areas

22.8% 26.4%

18.5% 18.0%

14.3% 14.2%

4.3% 4.8% 5.3% 5.2%

13.2% 12.2%

2011 2012YTD

Regulatory cost IC cost

Amortization and Depreciation (A&D) Network OPEX

Other Operating Cost SG&A excl. A&D

22.8%

22.1%

outlook 2012

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882

Free cash flow

Revenue growth

Approx. THB 18.0 – 19.0 billion CAPEX at THB 8.0 – 9.0 billion

High single digit

4.0 – 5.0 million net adds for the industry. Net adds

Investor Relations: www.dtac.co.th

E-mail: ir@dtac.co.th

Tel: 662 202 8882