NEXT X GENERATION EXPERIENCE Investor Newsletter Volume 3/2018 AIS NO. 1 4G Service Provider with the most efficient 1800MHz bandwidth Scan QR Code to be friend with investor relations on LINE@
CEO MESSAGE Dear Shareholders, Recently, AIS participated in the 1800MHz license auction and has won a 2x5MHz block under the license life of 15 years. AIS has thoroughly evaluated all terms and conditions and is confident that acquiring the 5MHz will give the most benefit to increase 4G capacity as well as 5G in the future. Regarding the performance of 1H18, we continued to deliver core service revenue growth of 4.9% YoY, attributable to mobile, fixed broadband, and consolidation of CSL, which was acquired and completely delisted. We expect growth of core service revenue for full-year at 5-7%. Also, with on-going cost management, AIS reported 1H18 net profit of Bt16,042mn, growing 7.6% YoY and has paid an interim dividend for 1H18 performance amounting Bt3.78/share. Despite intense competition, AIS continues to focus on quality acquisition and enhances our service to best suit customer s need. Latest we launched NU Mobile, an online endto-end service, while in preparation to deliver other digitized products and services especially in video content, mobile money, and IoT. Until next time, Somchai Lersutiwong Chief Executive Officer 2
1H18 PERFORMANCE Revenue and profit continued growing with readiness to serve enterprise segment 63.7 1H17 34.5 1H17 14.9 +4.9% YoY 66.6 1H18 +10% YoY 37.9 1H18 47% margin +7.6% YoY 16.0 Core service revenue (Bt bn) Grew from mobile, FBB, and consolidation of CSL, which will help grow enterprise segment EBITDA (Bt bn) Continued opex optimization, reduced marketing expense to focus quality revenue Net profit (Bt bn) Followed growth in EBITDA, and paid Bt3.78/share as interim dividend, a 4% dividend yield 2018 Core service revenue +5-7% YoY 2018 Guidance EBITDA margin of 45-47% 2018 Guidance CAPEX of approx. Bt25bn Operational highlights Mobile Business Revenue market share 48% 4G subscriber penetration 54% Average data usage 8.9 GB/month Fixed Broadband Business Subscriber market share 7% Revenue proportion to total service revenue 3% 1H17 1H18 Please see 2Q18 results from MD&A at http://investor.ais.co.th/quarterly_report.html 3
QUARTERLY HIGHLIGHT (I) AIS acquired 2x5MHz of 1800MHz, enhancing leading position Currently, AIS uses a total spectrum of 2x60MHz for mobile service, including a low frequency (900MHz) and high frequencies (1800/2100MHz) both under the license for operation and partnership with TOT. This enables AIS to deliver quality coverage and capacity to maintain leadership in the past 28 years. Bandwidth by frequency range Bandwidth by last year of right to use MHz 2x10 900 MHz License 2x5 2x15 1800 MHz Latest auctioned license License 2x15 2x15 2100 MHz Partnership with TOT License MHz 2x15 2x15 2x10 2025 2027 2031 2x5 2x15 2033 Acquiring 5MHz, AIS aims to enhance 4G network as well as Thailand s telecom infrastructure. With the current spectrums, this has made AIS an operator having the largest bandwidth in the industry to render 4G/3G/2G services for over 40mn users nationwide. 4
QUARTERLY HIGHLIGHT (II) AIS acquired 2x5MHz of 1800MHz, enhancing leading position The 1800MHz acquisition is the most economical investment option There are two ways to increase network capacity. One is to increase the bandwidth, similar to increasing a road lane, or two is to invest in new cell sites using advanced engineering solutions, similar to building a highway. At one point in time, operators will select the option with the highest benefit when incorporating other factors. For this auction, AIS has ensured that acquiring only 2x5MHz at this time is the most economical option. Build new cell sites versus Turn on another 2x5MHz carrier Reduce long-term investment Used with existing 1800MHz network equipment Immediate launch to market 5
QUARTERLY HIGHLIGHT (III) AIS acquired 2x5MHz of 1800MHz, enhancing leading position Enhance customer experience in all segments with the most efficient 4G standard An operator with noncontiguous bandwidth can use a technique called Carrier Aggregation (CA) to combine different bandwidths (such as 1800MHz and 2100MHz) to increase capacity. However, only high-tier handsets are compatible with such technique currently. Download speed 1) (Mbps) 300 ~20% 15-30% speed uplift with contiguous 2x20MHz of 1800MHz ~15% With the acquired spectrum, AIS now has contiguous 2x20MHz of 1800MHz, the most efficient 4G standard. All customers with 4G-handset will experience higher speed, especially those who carry low- to mid-tier handsets that can get as high as 30% speed uplift. 200 100 ~30% AIS is the sole operator with contiguous 2x20MHz bandwidth of 4G-1800MHz Non-CA 4G- handset 2CA 4G- 3CA 4Ghandset handset 2) 3) 1) Highest speed before applying other techniques e.g. MIMO 2) e.g. iphone 6S 3) e.g. iphone 7 to iphone X 6
QUARTERLY HIGHLIGHT (IV) AIS acquired 2x5MHz of 1800MHz, enhancing leading position De-risk and prepare financial strength for the future In 2020, 5G will be commercialized in some leading countries. For Thailand, the NBTC is studying appropriate spectrums to be allocated. Although having participated the 1800MHz auction, AIS continues to maintain financial flexibility for future spectrum auctions and expects that current spectrum capacity will be sufficient until 5G is commercialized or until there is another validate opportunity to acquire more spectrum. 400MHz 700MHz 900MHz 1800MHz 2600MHz 3.4-3.8GHZ 26-28GHZ Potential frequencies to be allocated for 4G/5G in Thailand Use of bandwidth depends on Spectrum and technology standards Spectrum allocation by regulator Business models on each band Net debt to EBITDA 1.2 times Maintain financial strength (as of 2Q18) 1H18 operating cash flow Bt35,000mn Return on equity 64% Spectrum and technology standards of 5G become clear Countries such as China and South Korea commercialize 5G Roadmap of 5G Leading operators launch 5G. 2019 2020 7
AIS MERGES ONLINE WITH OFFLINE, RESPONDING TO ALL CUSTOMER S NEEDS (I) Live digital, Live more AIS continues to move toward Full Service Digitization to respond to all segments of customers and to optimize the long-term cost to serve. We aim to be number one in customer service while giving highest importance to data privacy and maintaining the quality service of physical human touch points. Face recognition in service Face recognition is currently used for new number registration at all touch points with highest accuracy and data privacy. AIS is also the first one to launch face recognition at 80 service Kiosks. Full-E check/pay/receive bills and receipts via myais application epay ereceipt 1. ebill: check bills on mobile and receive SMS notification 2. epay: pay bills online via mobile banking, Rabbit LINE Pay, or auto-deducting from credit card 3. ereceipt: see past 3-month receipts (start in 4Q18) 8
AIS MERGES ONLINE WITH OFFLINE, RESPONDING TO ALL CUSTOMER S NEEDS (II) Live digital, Live more Partner with Google to develop Google Assistant AIS is the first one in ASEAN to co-develop a system that enables voice command on myais and AIS PLAY and is in preparation to launch Alex Robot embedded with AI to give product information to customers. Understand the high-tech elderly AIS has set up Angel Team to specifically taking care of the elderly who are keen to learn about technology. The staff are well trained to use simple language and to be receptive. Everyone is important. Click to see Angel team ad or search สอนล ง เปนคร งส ดทาย ไดไหม on YouTube Launched NU Mobile NU Mobile is a new online end-to-end SIM where the customer buys SIM from the website, registers via digital KYC, and pays online. NU Mobile emphasizes on convenience, easiness, and worry-free with unlimited mobile internet. 9
How cool? No complication All online anywhere anytime No worries Unlimited data with fixed speed No conditions Easy without asterisks. No surcharge. 1Gbps Start at Bt /month Incl. VAT Unlimited data, fixed-speed Unlimited at 2Mbps Unlimited social media, music, video clips All networks 100 minutes voice call 100 SMS Start at 2,999.- เร มตน 2,999.- Max Speed Internet (Download/Upload) 100 1Gbps/ Mbps 100 GB 600-minute free call SIM card on the fastest network in Southeast Asia that comes with irresistible free call package and the best Wi-Fi network AIS SUPER WiFi Unlimited More than 100,000 Wi-Fi Access Point Enjoy AIS Serenade Platinum privileges. More at https://numobile.io More at www.ais.co.th/fibre
PERFORMANCE OF ADVANC Analyst Consensus Statistics of ADVANC 25% 75% Target Price Bt220 Closing price Highest price in 52 weeks Lowest price in 52 weeks Average volume in past 5 days Total outstanding shares Bt197 Bt215 Bt174 4.7 million shares 2,973 million shares Buy Contact at investor@ais.co.th or +66 2029 5014 Website: http://investor.ais.co.th Hold P/E Dividend Yield Financial Ratios 18.7 times 4% / year Source: Reuters as at 17 August 2018 11