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Digital Telecommunications Infrastructure Fund (“DIF”) Roadshow Material May 2016
Strictly Private and Confidential
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[DRAFT]
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Disclaimer This document is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering is being made in the United States.
This document has been prepared by True Corporation Public Company Limited (“True”) and SCB Asset Management Company Limited (the “Management Company”) solely for use at this presentation in connection with the proposed information of Digital Telecommunications Infrastructure Fund (“DIF”) and is being made available to you solely for your information and for use at such presentation.
The contents of this document are based, in part, on certain assumptions and information obtained from True, the Management Company and their respective directors, officers, employees, agents, affiliates and/or from other sources. All information included in this document and any oral information provided in connection herewith speaks as of the date of this presentation (or earlier, if so indicated) and is subject to change without notice. The information contained in this presentation has not been independently verified. The information in this presentation is in summary form and does not purport to be completed. No representation or warranty, express or implied, is made or given by True, the Management Company, Siam Commercial Bank Public Company Limited or any of their respective directors, agents, employees, representatives or affiliates as to, and no reliance should be placed on the accuracy, reliability, fairness or completeness of the information presented or as to the reasonableness of any assumptions on which any of the same is based. True, the Management Company, Siam Commercial Bank Public Company Limited or any of their respective directors, agents, employees, representatives or affiliates accept no responsibility, obligation (including, but not limited to, any obligation to update any information contained in this document) or liability (whether direct or indirect, in contract, tort or otherwise) for any losses arising from any information contained in this presentation or oral information provided in connection herewith.
This presentation contains forward-looking statements and during the course of this presentation, True and the Management Company may make projections or other forward-looking statements regarding, among other things, DIF’s business outlook and investments, competition, estimates of future performance, anticipated results, future revenues, cash flows or capital requirements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases you can identify these statements by words such as “could,” “may,” “expects,” “anticipates,” “believes,” “intends,” “estimates,” or similar words. You shall review the risk factors discussed in the Thai prospectus or the international preliminary offering memorandum which are being prepared by True and the Management Company in connection with the contemplated transaction. In light of these risks and uncertainties and other factors not currently viewed as material, there is no assurance that the forward-looking statements made during this presentation will in fact be realized and actual results may differ materially from those described in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements speak only as at the date as of which they are made, and, except as otherwise required by applicable securities laws, True, the Management Company, Siam Commercial Bank Public Company and their respective directors, agents, employees, representatives or affiliates disclaim any intention or obligation to supplement, amend, update or revise any of these forward-looking statements. Accordingly, any reliance you place on such forward-looking statements will be at your sole risk.
All amounts included in this presentation are expressed in Thai Baht, unless otherwise noted.
This presentation does not constitute or form part of an offer to sell or issue or a solicitation of an offer to buy or invitation to purchase or subscribe for any securities of DIF in any jurisdiction in which the making of such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction or would not otherwise be in compliance with the laws or regulations of such jurisdiction, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment or investment decision whatsoever. Specifically, any investment and/or voting decision should be made exclusively on the basis of the Thai Prospectus or the final offering memorandum (as applicable) or Unitholders Meeting Circular to be prepared by the Management Company and True in connection with the contemplated transaction. Investing in the investment units referred to herein involves certain risks and potential investors should note that the value of the investment units may go down as well as up. Investors shall obtain and review the relevant information carefully before investing. The recipients of this document must conduct their own investigation and analysis of the contemplated transaction and the information and data contained herein should the recipient proceed.
By attending this presentation and/or accepting a copy of this document, you agree to be bound by the foregoing limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that: (i) you have read and agree to comply with the contents of this notice; (ii) you are either (x) a U.S. person (as defined in Regulation S under the Securities Act ) who is a qualified institutional buyers as defined in Rule 144A under the Securities Act and also a qualified purchaser (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940) or (y) a non-U.S. person who is not a resident of the United States; (iii) a “special subscriber” as such term is provided in the Notification of the Capital Market Supervisory Board No. Thor Nor 1/2554 Re: Rules, Conditions and Procedures for the Establishment and Management of the Infrastructure Funds and the Notification of the Office of the Securities and Exchange Commission of Thailand No. Thor Nor 1/2554 Re: Rules, Conditions and Procedures for the Establishment and Management of the Infrastructure Fund; and (iv) you will not purchase any investment units referred to in this document except of the basis of information in the final Thai prospectus and/or the offering memorandum (as applicable) or UHD Meeting Circular prepared by True and the Management Company in relation to the contemplated transaction together with any supplementary prospectus/memorandum or other pricing information.
Investment contains certain risk. Investors are recommended to study the Thai prospectus and/or related information before making an investment.
For more information, please contact SCB Asset Management Company Limited at +66 2 777 7777, press 0, press 6.
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Performance Summary
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Key Developments Since Fund Inception
Source: SETSMART and Bloomberg as of Apr 2016 Note: Dividend payment from profits, no capital reduction
LIQUIDITY
Shares mm US$mm
5-Day ADTV 5.9 1.9
20-Day ADTV 6.5 2.1
3-Month ADTV 8.3 2.6
6-Month ADTV 7.7 2.4
Key Events Since Inception
3
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
0
1
2
3
4
5
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Monthly ADTV (RHS) Unit Price (LHS)
24 July Announced
dividend (THB 0.2365)
2016 2014
9 Jun Anchor tenant
announced recapitalization
25 Jul TRUE’s
shareholders approved the
Recapitalization
29 Oct DIF’s
announcement of colocation with
DTAC
2 May XD for
dividend (THB 0.2643)
6 Aug XD for
dividend (THB 0.1938)
27 Oct Announced
dividend (THB 0.2603)
27 Dec 2014 IPO
THB 10.00
19 Jan 2015 DIF’s
announcement of additional
asset acquisition
2015
29 April Announced
dividend (THB 0.235)
31 Aug Announced
name-changing to DIF
26 Oct Announced
dividend (THB 0.2370)
2014
2015
26 Jan 2016 Announced
dividend (THB 0.2375)
26 Apr Announced
dividend (THB 0.2380)
20 Jan Signed amended deal with DTAC
4
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1,518 1,461 1,461 1,461
5,901 5,788
269 269 269 269
1,076 1,076
1,787 1,730 1,730 1,730
6,977 6,864
1Q15 2Q15 3Q15 4Q15 FY2015 2015F
Total Income Unearned income
+
1,294
295
1,589
1Q16 2Q16 3Q16 4Q16 FY2016 2016F
Net investment income Unearned income
2015 and Q1 2016 Performance Summary
Adjusted Revenue 2015 Adjusted Net Investment Income 2015
Unit: THB mm
Source: DIF Financial Statements for 2015, and Q1 2016 and forecasted financial statement for 2015 (1) Unearned income = advanced rental income for the 3,000 towers delivered to DIF by end of 2014 and another 3,000 towers by end of 2015
Adjusted Revenue 2016 Adjusted Net Investment Income 2016
Unit: THB mm Unit: THB mm
4
+
=
+
+
=
+ +
1,563
295
1,858
1Q16 2Q16 3Q16 4Q16 FY2016 2016F
Total Income Unearned income
1,408 1,222 1,194 1,224
5,048 4,685
269 269 269 269
1,076 1,076
1,677 1,491 1,463 1,493
6,124 5,761
1Q15 2Q15 3Q15 4Q15 FY2015 2015F
Net investment income Unearned income
Unit: THB mm
+ + =
+ + +
= =
= + + +
5
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2015 and Q1 2016 Performance Summary (Cont’d)
Dividend Distribution 1Q 2016 Net Asset Value
72,113 (133) 1,408
(1,365)
72,111 73,181
NAV as at 31Dec 2014
Netunrealizedloss fromSWAP
Netinvestment
income
Cashdistribution
NAV as At31 Mar 2015
Market Capas at 30 Apr
2015
12.32 (0.24) 0.24 (0.02) 14.61
Unit: THB mm
THB / Unit
14.20
0.24 0.24 0.24 0.24
0.95 0.91
0.24
1Q15 2Q15 3Q15 4Q15 FY2015 FY2014 1Q16
+
Unit: THB per Unit
+
(1)
=
103.5%
(IPO Prospectus)
+
Source: DIF Financial Statements for the year 2014, for the quarter 1, 2, 3, and 4 2015, and for quarter 1 2016 (1) DPS for 23 Dec 2013 to 31 Mar 2014 is THB0.26 per unit. After removing dividend for the period from 23 to 31 Dec 2013 by pro-rating using number of days, adjusted DPS for the period from 1 Jan 2014 to 31 Mar 2014 is THB0.24 per unit
71,579 (1,379) 1,294
13,488 (132) 84,849 82,474
NAV as at31 Dec2015
Cashdistribution
Q4'15
Netinvestment
income
Netunrealized
gain onINV
Netunrealized
loss onINV &SWAP
NAV as at31 Mar2016
MarketCap as at
31 Mar2016
2015
5
2014 1Q16 2.32
6
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FY 2015 P&L Analysis
Accounting Revenue - 2015
4Q 2015 Net Asset Value
72,113 (133) 1,408
(1,365)
72,111 73,181
NAV as at 31Dec 2014
Netunrealizedloss fromSWAP
Netinvestment
income
Cashdistribution
NAV as At31 Mar 2015
Market Capas at 30 Apr
2015
12.36 (0.24) 0.21 (0.01) 12.32
Unit: THB mm
THB / Unit
12.40
71,812 (1,376) 1,224 (81) 71,579 72,019
NAV as at 30Sep 2015
Cashdistribution -
Q3'15
Netinvestment
income
Netunrealized
loss from INV& SWAP
NAV as at 31Dec 2015
Market Capas at 31 Dec
2015
Expense - 2015
3,000 Towers (TRUE) (636.0)
11%
Tower + FOC transmission (AWC&BFKT)
(3,111.7)
55%
FOC Network + UBB
(AWC&TUC) (1,946.3)
34%
2015 Accounting Revenue Breakdown
6,000 Towers (TRUE)
(1,025.9)
17%
Towers + FOC Transmission (AWC&BFKT)
(3,112.1)
50%
FOC Network + UBB
(AWC&TUC) (2,081.7)
33%
2016 Accounting Revenue Breakdown excl. 3rd party
Unit: THB mm
Unit: THB mm
1. Fund Management Fee 64.4
2. Mutual Fund Supervisor Fee 14.0 3. Registrar Fee 5.0 4. Telecom Asset Manager Fee 47.4 5. Operating Expense 94.0 6. Finance cost 596.6
1
2
3
4
5
2 3 1
4 5
Adjusted NAV(2) <= THB 30 bn 0.11% of the portion THB 30 bn < Adjusted NAV <= THB 50 bn 0.075% of the portion Adjusted NAV > THB 50 bn 0.05% of the portion
NAV <= THB 50 bn 0.02% of the portion NAV > THB 50 bn 0.018% of the portion
0.023% of the registered capital of the Fund, a maximum of Baht 5.0 million
Criteria
(1) Admin services: Fixed THB 18.3 mm in 2014 with CPI growth + Variable 0.15% of monthly net revenue (2) Marketing services: Fixed THB 20 mm in 2015&2016 only + Variable 2% of 3rd party revenues
Right of Way cost for both batches = THB 94.0 mm
Mar 6 to Sep 4, 2015: Interest Expense per Facility Agreement = THB 329.9 mm Loss from Interest Rate Swap (IRS) agreement = THB 26.6 mm Sep 5 to Dec 31, 2015: Interest Expense per Facility Agreement = THB 207.0 mm Accrued loss from IRS agreement = THB 26.1 mm(3) Total = THB 589.5 mm
(2) Adjusted NAV is the total assets minus non-interest bearing liabilities. (3) This item is not shown in P&L. 6
1
2
3
4
5
6
Tower (TRUE): 3,000 towers in 2015 FOC Network (AWC&TUC) Upcountry Broadband System (TUC) Tower (AWC&BFKT): 6,183 towers FOC Transmission (BFKT)
636.0 (1)
782.9
1,163.4
1,560.3
1,551.4
(1) Accounted for the rental revenue from 3,000 towers only in 2015 and partial rental revenue from DTN
= Rental Income = Income from the right to receive net cash flow
Note: + +
+
Fund Management Fee Mutual Fund Supervisor Fee Registrar Fee Telecom Asset Management Fee Operating Expense Finance Cost (6.1) Interest Expense (6.2) Front-End Fee
64.4
14.0
5
47.4
94.0
596.6 563.4
33.2
weighted avg. cost of debt = 5.46%
Payment Date: Beg of Sep & Mar
Mar 6 to Dec 31 2015: Front-End Fee = THB 32.4 mm (Total Fee: THB 196.5 mm, amortized over 5 years) Other Finance Cost = THB 0.8 mm
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Latest Transaction Summary
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Executive Summary of Investment in the Additional Infrastructure Business Assets No. 1
The Key Voting
Agenda*
To invest in additional assets from TRUE as following (The source of fund will be 100% debt)
Fiber Optic Cable (“FOC”) Assets (~303,453 core-km): 20-Year lease with call option (THB
500 million) at contract expiration and 11-year leaseback by TUC
Tower Assets (338 Towers): Right to net revenue of 11-year from lease of AWC’s tower
assets and asset transfer at contract ends
Key concerns and risks
Gearing risks: Debt/EBITDA will 2.57x (from 0.0x) and DEBT/Equity will be 0.19x (from 0.0x)
Interest rate risks:
Key Dates
XM
Unitholder Meeting
Investment Value The investment value is 13,100 THB mm
Benefit to
Unitholder
Inorganic growth opportunity to have more extensive FOC grid, offering more coverage
Immediate return accretive: The next 12-months DPU will accretive not less than 0.005
THB/unit (0.6% increase from pre-transaction DPU) as SCBAM have prescribed condition for
investment that this investment must cause projected DPU to increase as mentioned above**
Growth opportunity: 1) Increase in unused capacity of 89,635 core-km (30% of total capacity
of new FOC assets) to lease to 3rd parties and 2) Increase from utilization under lease back
contract from TUC
Key Concerns Gearing Risks: Debt/EBITDA will 2.32x (from 0.0x) and Debt/NAV will be 0.18x (from 0.0x)
Interest Rate Risks: Fund Manager will consider hedging this risk
* TRUE will abstain from voting this agenda due to conflict of interest ** From Opinion of SCBAM in UHD Meeting Circular and refer to financial information based on scenarios for the projection period 1 April 2015 to 31 March
2016 by independent auditor 8
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Transaction Overview
Fund Name Digital Telecommunications Infrastructure Fund (“DIF”)
Transaction Acquiring additional telecom infrastructure assets, funding via debt
Fund Manager SCB Asset Management Company Limited
Sources/Cost of Fund 100% Commercial bank loan with Fixed Interest Rate at 5.46%
Investment Assets 7,981 km (or ~303,453 core-km) of Fiber Optic Cable (“FOC”) from AWC 338 towers from AWC
Asset Appraisers Capital Plus Advisory Company Limited (THB 15,797 – 18,832mm) Silom Advisory Company Limited (THB 16,903 – 18,112mm)
Transaction Size THB 13,100 million
Key Agreements
FOC Assets: 20-Year long-term leasehold of AWC’s FOC, with call option (THB 500 million) at contract expiration and 11-year leaseback by TUC
Tower Assets: Right to net revenue of 10-year from lease of AWC’s tower assets and asset transfer at contract ends
Tentative Loan Term 5-year bullet repayment term from Commercial Banks
Fund Supervisor Kasikornbank Public Company Limited
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Investment Summary
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DIF assets overview (post-transaction)
Source: Company information as of February 2015 (1) True to deliver or procure delivery of 3,000 towers by end of 2014 and 3,000 additional towers by end of 2015; however, advanced rental payments will be made by Real
Future (“RF”) starting from 1 Jan 2014. Once procured, these towers can be marketed for colocation to 3rd party mobile operators. (2) If in 2026, TRUE group renews its operating license, and either following condition is met (A) its total revenue from broadband service business is above pre-determined
threshold, or (B) total market share in broadband service > 33%, TRUE group is obliged to sublease for another 10 years or the remaining term of renewed license, whichever is shorter.
DIF’s telecom infrastructure asset portfolio is the biggest and the most diverse in Thailand in terms of interests in telecom towers and types of telecom infrastructure
AWC True BFKT TUC Assets / entity All
9,169 links and 47,250 km FOC (680,400 core km)
5,112 km FOC (122,974 core km)
Fiber Optic Cable
(“FOC”) and Transmission
9,169 links and 60,343 km FOC (1,106,827 core km)
Sale of right to net revenues + Call Option (THB 10mn) Asset transfer Structure Total
4,360 towers
+ 338 towers 6,000 towers(1) 1,485 towers Towers 12,183 towers
Upcountry broadband
system (“UBB”)
1.2 million ports encompassing 6,114 km FOC
(198,085 core km)
1.2 million ports encompassing 6,114 km FOC
(198,085 core km)
(“New Tower Assets”)
+ 7,981 km FOC (303,453 core km)
Growth
Growth New
New
Long Term Lease +
Call Option (THB 500mn)
AWC
Call Option Year 2035
Lease-Back Contract Term
2025
2025 2026 + 10 Years(2) 2026 & 2027 2018 (Active Assets)
2026 (Passive Assets)
Growth
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Assets with growth
potential 64%
Stability 36%
Assets with growth
potential 57%
Stability 43%
Asset mix profiles
Asset Mix Proportion of assets with growth potential
Revenue Mix
Pre-transaction Post-Transaction
Post-Transaction asset mix is enlarged mainly by FOC assets which are sharable, with growth potential
Note: Calculation based on fund revenue from projected Financial Information for the period 1 April 2015 to 31 March 2016 by independent auditor
FOC 48%
Towers 52%
FOC 57%
Towers 43%
Pre-transaction Post-Transaction
Note: Calculation based on NAV as of 30 Sep 2014 and Appraisal report 26 Jan 2015 from Silom Advisory
Note: Calculation based on NAV as of 30 Sep 2014 and Appraisal report 26 Jan 2015 from Silom Advisory
Fund revenue 2015
pre post
Net revenue from True from new towers (straight
lined for accounting purpose)
581 581
BFKT & AWC towers (revenue sharing) 1,486 1,486
Revenue from third party (Existing assets) 11 11
New Towers - 66
BFKT FOC (net revenue sharing) 1,551 1,551
TUC 1,329 1,329
New FOC - 555
Total revenue 4,959 5,581
Physical Asset
Pre New Post
Towers 11,845 Towers 338 Towers 12,183 Towers
FOC * 803,374
Core-km
303,453
Core-km
1,106,827
Core-km 5,125 5,125
830
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Pre Post
New towers and FOC assets
THB mm
* Not include FOC under upcountry broadband system Existing assets
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Financial Proforma after Transaction
DIF financial ratios are healthy at less than 2.5x Debt/EBITDA and 0.2x Debt/Equity
ActualPost Transaction
(Forecasted)
Revenue 5,946 5,958
EBITDA 5,687 5,657
Net investment income 4,935 4,942
Excess liquidity from advance rental 343 359
Distribution 5,494 5,252
Dividend/Unit 0.946 0.904
Debt 13100 13,100
Net asset 84,849 72,009
Debt/EBITDA 2.30x 2.32x
Debt/Equity 0.15x 0.18x
Peer's Debt/EBITDA* 5.69x
Peer's Debt/Equity* 1.80x
Source: Projected Financial Information for the period 1 April 2015 to 31 March 2016 by the fund manager’s estimate and proforma by the fund’s auditor Peers information from Bloomberg as of Feb 2015
The numbers on table above are based on the assumption of no rental from third party on the new asset
* Peers include American Tower Co, Crown Castle, and Tower Bersama
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Investment Highlights - Towers
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Nationwide portfolio of telecom towers
Telecommunication towers located in all
77 provinces in Thailand
Allows BFKT to reach targeted network
populations of approximately 95% through
3G mobile services
BFKT and Real Future will continue to
use towers for mobile network
requirements and new and expanding 3G
and 4G-LTE networks
The New Tower Assets also will have
available slots to host other mobile
telecommunication service providers
BFKT and TUC’s FOC grid span
approximately 52,362 km across 73
provinces in Thailand
Unique portfolio of telecommunication towers and other infrastructure assets that will be one of the largest and most diverse in Thailand
12,183(3) telecommunications towers located in all 77 provinces of Thailand
Source: Company information. Note: Geographical split of towers includes New Tower Assets. (1) Excluding BMA. (2) BMA = Bangkok Metropolitan Area. (3) Includes 6,000 towers to be delivered by True, with 3,000 due by the end of 2014 and 3,000 due by the end of 2015.
Total 12,183 in ALL 77
provinces
East BFKT & AWC towers: 753
New Tower Assets: 562
% of total: 10.8%
North BFKT & AWC towers: 1,304
New Tower Assets: 835
% of total: 17.6%
Central and West(1)
BFKT & AWC towers: 957
New Tower Assets: 886
% of total: 15.1%
South BFKT & AWC towers: 1,028
New Tower Assets: 793
% of total: 14.9%
Northeast BFKT & AWC towers: 1,319
New Tower Assets: 1,130
% of total: 20.1%
BMA(2)
BFKT & AWC towers: 822
New Tower Assets: 1,794
% of total: 21.5%
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Announcement on Colocation with DTAC
Number of Towers Leased by DTAC Supported by All Stakeholders
115
500
Contract Signed # of towers which will be delivered to DIF this year that match with DTAC’s strategic
location map
“Leasing telecom towers …enhance the fund’s revenue and dividend to investors…and reduce the fund’s single tenant risk.”
Smith Banomyong President of SCBAM
Unit: # of Towers
Source: IPO Offering Circular and DIF’s SET Notification (1) The first batch of 3,000 towers were delivered to DIF within 2014
“DTAC has agreed to lease an initial amount of 115 slots and expects to lease more slots from DIF next year.”
Khalid Shehzad Chief Technology Officer of DTAC
“TAM will focus on signing up more co-tenants for tower assets because …operators …are expanding their networks to fuel growth of their 3G services”
Songtham Phianpattanawit, Managing Director of TAM
“…a promising initial step of infrastructure sharing in Thailand…highly encouraged by NBTC”
Thakorn Tantasith Secretary-General of the NBTC
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9,000
2,000
5,000
2,500
AIS
DTAC
TRUE
CAT
TOT
DIF
?
✓
✓
6,000 ✓
13,000 but under concession with AIS until Sep 2015 ?
2,500
c.13,000 but under ownership disputes with AIS and DTAC ✘
c.7,500 but under disputes with CAT
✓ Marketable ? Potentially marketable in the future
✓
✘ Not marketable in the foreseeable future
All operators will require
additional towers to complete
their 3G/4G network roll out
Incentive to lease towers as less
expensive and faster than new
construction
Readily available for rent?
Description
✓
3,000 towers delivered to DIF within 2014 and another 3,000 within 2015
x Exclusively leased to CAT. Will be available for rent to other parties in 2025
x
Concession with AIS ends in Sep 2015. Ownership disputes between TOT and AIS
x Ownership disputes between CAT and operators
Telecom Tower Demand & Supply Landscape
Supply of Telecom Towers
Demand of BTS Slots
2
1
1
2
3
4
Estimated Number of Existing Telecom Towers(2)
Estimated Number of BTS Slots(1)
Source: IPO Offering Circular, company filings and public news sources (1) Estimated numbers of BTS slots demand and supply by SCBAM and TAM (2) Estimated numbers of existing towers in Thailand by SCBAM and TAM
3
4
DIF is well positioned to capture
the demand for BTS slots given
its neutrality and assets that are
readily available for rent
Currently the only player
who actively markets telco
towers to other operators
3,000 towers ready for
lease within 2014 and
another 3,000 within 2015
Key Drivers for Colocation
Higher frequencies require
more BTS to achieve the
same network coverage
compared to lower
frequencies
Mobile operators want to
rollout networks faster
(driven by the
requirement for 90%
nationwide 3G coverage
within 2015)
Less expensive than
constructing new towers.
Capex savings can
be used for other purposes
✓
✓
✓
AIS DTAC
BTS Target 30,000 BTS 25,000 BTS
BTS Met 25,500 BTS 16,000 BTS from towers that
are under dispute with TOT 9,000 BTS from newly-built
towers (AWN and AIS) 500 BTS from Tower Sharing
with DTAC
13,500 BTS 11,000 BTS with towers that
are under dispute with CAT 2,000 BTS from newly-built
towers 500 BTS from Tower Sharing
with AIS
Potential demand for 3rd party BTS
4,500 BTS 11,500 BTS
Estimated Number of Existing Towers(2)
? 6,183 to be transferred to fund in 2025 after exclusivity with CAT ends
17
✓
18
230 0 125
134 135 139
0 112 192
90 180 130
0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120 1300
2017
3021 3078 3276 3540 4,552 4852 5137
5,41 5656 5893
23
52 77261
643267
717
1,004 57198
264300
290422
300285
280239
107
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Total
6,000
Tower Delivery Update
Under the Asset and Revenue Sale and Transfer Agreements between TRUE and DIF, TRUE is obligated to deliver or procure the delivery of 3,000 towers by end of 2014 and another 3,000 towers by end of 2015
As of Dec 2015, TRUE delivered all of 6,000 towers, as stated in the agreement.
Delivery Status
18
Towers delivered
230 0 125
134 135 139
0 112 192
90 180 130
0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120
Investment Highlights - FOCs
20
230 0 125
134 135 139
0 112 192
90 180 130
0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120
Readily available for rent?
Description
✓
3,000 towers delivered to DIF within 2014 and another 3,000 within 2015
x Exclusively leased to CAT. Will be available for rent to other parties in 2025
x
Concession with AIS ends in Sep 2015. Ownership disputes between TOT and AIS
x Ownership disputes between CAT and operators
2
1
1
2
3
4
3
4
East TUC & AWC: 76,207 core-km
(+359%)
North TUC & AWC: 76,528 core-km
(+530%)
Central and West(1)
TUC & AWC: 149,597 core-km
(+315%)
South TUC & AWC: 64,072 core-km
(+189%)
Northeast TUC & AWC: 60,023 core-km
(+67%)
Assets Capacity & Utilization (excl. BFKT FOC &
UBB)
Increase the chance to attract 3rd parties
More extensive grid (increase 240%) offers
more coverage to other national operators
Majority (74%) of new FoC is access system
(compared with 54% before acquisition),
implying increase in marketability due to more
comprehensive coverage
Immediate cashflow generation with long-term lease
back from TUC
Improved margin from Economy of scale
Note: 1/ Excluding Bangkok * Excluding BFKT’s 680,400 core-km under revenue sharing and excluding FOC under upcountry broadband system
Total 426,427* core-km
nationwide
East TUC: 16,596 core-km
North TUC: 12,148 core-km
Central and West(1) TUC: 36,018 core-km
South TUC: 22,188 core-km
Northeast TUC: 36,025 core-km
Pre* Post*
Pre New Post
Capacity 122,974
Core-km*
303,453
Core-km
426,427
Core-km*
Utilization 60%-72% 65%-70% 63%-71%
Unused
Capacity
29,320
Core-km
(@72% TUC
reserve)
89,635
Core-km
(@70% TUC
reserve)
118,956
Core-km
Overview of DIF’s FOC Portfolio (excl.BFKT & Upcountry Broadband System) Nationwide portfolio of FOC grid that will be one of the largest and most diverse grid in
Thailand
20
21
230 0 125
134 135 139
0 112 192
90 180 130
0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120
Readily available for rent?
Description
✓
3,000 towers delivered to DIF within 2014 and another 3,000 within 2015
x Exclusively leased to CAT. Will be available for rent to other parties in 2025
x
Concession with AIS ends in Sep 2015. Ownership disputes between TOT and AIS
x Ownership disputes between CAT and operators
Key Drivers of FOC Business
2
1
1
2
3
4
3
4
Consumer’s demand for more and faster data usage from mobile and fixed broadband internet
FOC business is growing fast and is with great potential due to rapid increase in consumer’s and corporate’s demand
Mobile segment
Higher penetration of smartphones in Thailand along with increasing
demand of non-voice services will drive demand for data network
Fixed broadband segment
Exponentially increasing internet and fixed broadband users will drive
demands for higher bandwidth from operators for improved internet
experience
0%
50%
100%
2008E 2009E 2010E 2011E 2012E
Thailand Bangladesh China
India Indonesia Malaysia
Pakistan
0
10
20
30
40
2012 2013 2014 2015 2016 201
Mobile data plan subs
0
500
1,000
1,500
20
12
E
20
13
F
20
14
F
20
15
F
20
16
F
20
17
F
2G 3G 4G
Smartphone
penetration
Thailand’s increasing
smartphone penetration
Numbers of mobile
data plan subs
~56% CAGR growth
for mobile data usage
(2012-2017F)
Total network data
traffic by technology
Data traffic mostly
uses under 3G and in
the future 4G
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2014
2013
2012
2009
2008
200
2006
2005
2004
2003
2002
2001
2000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
2013
2011
2009
200
2005
2003
2001
1999
199
1995
1993
1991
Total domestic
bandwidth
~57% 10Y CAGR growth
(2004-2014) for domestic
bandwidth from operators
Numbers of internet
users in Thailand
~16% 10Y CAGR growth
(2003-2013) of internet
users
Number of subs and
subscriber market share
Fixed broadband market is
shared among few players
‘000 TB
million
Bandwidth (Mbps)
Users
Source: Analysys Mason (information dated 5 July 2013) , NECTEC website (http://internet.nectec.or.th/webstats/, as of Oct 2014)
36% 37% 38% 38% 39% 40%
0
1
2
3
4
5
6
20
12
E
20
13
F
20
14
F
20
15
F
20
16
F
20
17
F
TRUE TOT 3BB Others
Fixed
broadband
subs
(million)
21
22
230 0 125
134 135 139
0 112 192
90 180 130
0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120
Readily available for rent?
Description
✓
3,000 towers delivered to DIF within 2014 and another 3,000 within 2015
x Exclusively leased to CAT. Will be available for rent to other parties in 2025
x
Concession with AIS ends in Sep 2015. Ownership disputes between TOT and AIS
x Ownership disputes between CAT and operators
Key Drivers of FOC Business (Cont.)
2
1
1
2
3
4
3
4 Along with rapidly growing demand, regulatory support for digital economy opens up opportunity for
DIF to serve as a neutral platform
+
Government’s support to create platform for Digital Economy
Government ready to support and facilitate digital
economy
Thailand needs to develop telecommunication
infrastructure and networks, in form of “National
Broadband Backbone”, which would connect with the
“International Gateway”
ICT ministry plans to develop the broadband network to
provide access to at least 95% by 2020 up from 27% in
2014
Consumer’s demand for more and faster data usage from mobile and fixed broadband internet
Mobile segment
Higher penetration of smartphones in Thailand along with
increasing demand of non-voice services will drive demand
for data network
Fixed broadband segment
Exponentially increasing internet and fixed broadband users
will drive demands for higher bandwidth from operators for
improved internet experience
DIF, as a neutral telecom infrastructure platform, will be able to serve the industry’s rapidly increasing demand of data usages, from its available dark fiber capacity, providing telecom operators with:
More economical for long-term usage
Shorter time to market
Higher flexibility from DIF’s extensive grid coverage
Source: Information on digital economy from 1) news from The Government Public Relations Department as of Dec 2014 http://thailand.prd.go.th/print_news.php?id=7531 2) NBTC broadband penetration as of Q4 2014 3) ICT ministry policy framework as of Aug 2014
22
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120 120 120
Stages of Demand & Opportunity to DIF
Capacity
Demand under Capacity Current Stage High Demand Growth Maturing Stage
Use one own’s network
• Demand < operator’s
capacity / coverage
• Operator utilizes its own
invested network to
perform their services
Rent bandwidth from other
operators
• Demand > operator’s
capacity / coverage
• Operator begins to rent
capacity (bandwidth) from
others where they require
coverage
• Likely prefers renting
capacity than investing
• Relatively more expensive
Lease dark fiber from DIF
• Demand > operator’s capacity /
coverage in scale
• Operator requires to secure large
bandwidth and likely to invest in
dark fiber and equipment
• Opportunity for DIF to lease its
unused dark fiber
• Relatively cheaper than renting
bandwidth
Opportunity for consolidation of
nationwide FOC into DIF
• DIF reaches economy of scale,
providing:
• Competitive pricing for leasing
of dark fiber over each player’s
investing in own’s network
• Opportunity to DIF for
additional acquisitions and
consolidation of nationwide
FOC grid
23
24
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0 112 192
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0 157 181
Excel color scheme
225 132 0
165 80 180
120 120 120
Key Target Customers & Opportunity to DIF’s FOC
Key Players Business Segment Network coverage Key Developments
Mobile, Broadband, and
Corporate link Nationwide
Mobile, Broadband, and
Corporate link Nationwide
Mobile, Broadband, and
Corporate link Nationwide
Broadband, and
Corporate link Nationwide
Corporate link Specific province and not
fully nationwide Currently having MoU
Corporate link Specific province and not
fully nationwide
Currently having MoU
Corporate link Specific province and not
fully nationwide
Currently having MoU
Mobile, Broadband, and
Corporate link
Nationwide for mobile
Base station only
Currently under discussion with DIF
Internal use for mobile Nationwide for mobile
Base station only
Currently under discussion with DIF
DIF’s
Potential
Target
Customers
DIF’s potential target customers are telecom players who do not have nationwide coverage and/or players who may require specific areas of reach to their customers
24
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Appendix
26
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0 112 192
90 180 130
0 157 181
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120 120 120
DIF structure (as of 31 March 2015)
Source: Company information.
DIF
True
Public unitholders
Marketing of services for telecom infrastructure assets
Fund supervisor appointment agreement
Telecom asset manager
71.89%
Dividends
Dividends
Investment advisory committee
SCB Asset Management
(as Management Company)
Kasikornbank Public Co., Ltd. (as Fund Supervisor)
Fund scheme
Investment advice
28.11% Pay rent for telecom assets
26
27
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Credit Enhancement to our Anchor Tenant After Completion of Recapitalization
Transaction Summary
Raised THB65bn by issuing new shares to China Mobile and existing shareholders @ THB6.45 per share
Credit rating upgraded by Moody’s and TRIS
Use of Proceeds
THB56bn for repayment of debt
THB9bn for funding business operations
Shareholding Post-Transaction
CP Group: ≈ 51%
Public: ≈ 31%
China Mobile: ≈ 18%
Clear Synergies with China Mobile for TRUE
Increased bargaining for procurement
International roaming alliance
Best practice sharing
Content & applications exchange
Upgraded from
Caa1 to B2
Upgraded from
BBB to BBB+
5.5x
1.6x
Q2 2014 Q4 2014
Improved Credit Ratio
Ratings Upgrade
Net Debt to LTM EBITDA
Our anchor tenant’s stronger FCF and credit rating will contribute positively to DIF’s cash flow stability and credit profile
“The upgrades reflect TRUE’s stronger financial profile and business flexibility after the completion of the recapitalization”
October 2014
“The rating actions follow the completion of a recapitalization, which has significantly improved the company's leverage and equity base”
September 2014
27