dtac second quarter 2016 12 July 2016 Investor Relations E: ir@dtac.co.th T: +662 202 8882
Q216 highlights 25.0m total subscribers 92.3% of sub base registered under DTN THB8.7b data revenues 54.2% of service revenues ex. IC THB6.6b EBITDA 33.4% EBITDA margin THB4.3b CAPEX 21.7% to total revenues THB0.42 per share dividend 71% of net profit 2
operational highlights
widest 4G-1800MHz bandwidth in the market 20MHz contiguous bandwidth on 4G-1800MHz service already on air in BMA to expand in other areas in Q3 provide best 4G experience to all customers with 4G-enabled devices 4G-1800MHz network covers all 77 provinces 4G-2100MHz on track to cover all districts by Q316 continued improvement in network perception 4G 3G 41.6 35.5 30.7 27.0 15.6 22.5 24.2 10.3 6.3 3.4 2.9 3.4 19.6 20.8 23.6 24.3 25.2 26.0 no. of base stations (in thousand) 79 70 Q314 Q414 Q115 Q215 Q315 Q415 Q116 n= 2,000 2,000 2,080 2,090 2,096 2,082 2,086 network perception Source: Independent 3 rd -party Market Research. 4
strong development in 4G service 4G subs (in million) 2.9 3.5 3.5 million 4G subscribers 1.0 23% penetration of 4G-enabled devices device campaigns an important factor pushing 4G adoption 4G data usage (GB/sub/month) 3.4x 3.4x data usage increase continued expansion of 4G network driven by video and music streaming services 5
solid postpaid development +9.2% +13.1% network quality and perception improvement 4G/3G network expansion ongoing network perception campaign Q215 Q315 Q415 Q116 Q216 postpaid revenues Q215 Q315 Q415 Q116 Q216 sub base best offers in the market super non-stop packages with more choices device campaigns MNP campaigns pre-to-post campaigns retail shop expansion digital services VoWiFi / VoLTE dtac Music Infinite 6
challenges in prepaid -9.9% -11.0% Q215 Q315 Q415 Q116 Q216 Q215 Q315 Q415 Q116 Q216 prepaid revenues sub base challenging development due to widespread handset subsidy campaigns rapid decline in voice revenues migration to postpaid handset subsidy campaign to all customers from June network perception campaign real-time personalized topping offers dtac app, banners, SMS upsell, churn management dtac prepaid brand launched targeting digital generation free calls when topping up data free YouTube and music streaming 7
aspiring to become no. 1 digital brand offer attractive and relevant digital services for customers dtac app VoLTE, VoWiFi Capture cloud storage Music Infinite Jaew Wallet financial service plan to launch new services regularly 8
real-time personalized offers launched contextual upsell contextual intelligence platform real-time offers for each individual customer based on usage profile at a specific trigger point Contextual Intelligence SMS & USSD &URL launched via dtac app target dtac customers initially to expand to 3 rd party channels CMP BI dtac app, web, and self-service machine develop to become digital ad/marketing platform contextual real-time offers 3 rd -party channels 9
spectrum not a short-term concern Concession 1/ License 2/ 850MHz 1800MHz 2100MHz Total 2G 5MHz 5MHz 3G 10MHz 10MHz 20MHz 4G 20MHz 5MHz 25MHz Total 10MHz 25MHz 15MHz 50MHz 1/ concession expires in 2018, excluding 20MHz of unused 1800MHz band. 2/ license expires in 2027. strong spectrum portfolio work with authority for a clear spectrum roadmap: 2.6GHz, 2.3GHz, 1800MHz, 850MHz, etc. dtac has every intent to obtain additional spectrum in future auctions 10
financial highlights
92% of sub base registered under DTN dtac vs. DTN subscribers ARPU MoU million subs THB/sub/month QoQ YoY mins/sub/month QoQ YoY w/ IC w/o IC -3.1% -2.6% +4.1% +7.0% w/ IC w/o IC -7.4% -9.9% -12.8% -16.6% 28.4 26.9 24.9 25.3 25.5 25.0 215 218 220 238 234 227 216 206 208 213 194 179 23.5 23.5 21.9 22.6 23.1 23.0 5.0 3.5 3.0 2.6 2.3 1.9 dtac DTN 195 198 204 220 217 211 ARPU incl. IC ARPU ex. IC 174 165 165 169 153 138 MoU incl. IC MoU ex. IC porting of subs to DTN continues gradually postpaid net adds remains strong YoY increase due to impact from prepaid registration underlying ARPU continued trending down MoU on downward trend due to change in consumer behavior VoIP traffic, however, continued to grow 12
data revenue growth accelerated service revenues ex. IC data revenue data revenue breakdown THB billion QoQ YoY % of service revenues ex. IC % of vas revenues 16.8 16.4 16.4 16.6 16.4 16.0-2.4% -2.4% THB billion 1.6 1.5 1.5 1.6 1.6 1.5 44.5% 7.5 7.6 7.8 7.9 8.2 8.7 * 54.2% 50.0% 46.3% 47.5% 47.5% 8% 8% 7% 7% 11% 10% 3% 3% 3% 2% 4% 4% 7.8 7.3 7.1 7.1 6.6 5.8 7.5 7.6 7.8 7.9 8.2 8.7 85% 86% 89% 89% 90% 90% voice data others decline of service revenue QoQ was partly due to seasonality YoY decline was mainly driven by intense competition * excluding one-time accounting adjustment on prepaid revenues, service revenues ex. IC would have been THB16.2b, declining 1.4% QoQ and YoY. growth of revenue from data services remains strong, reaching 54% of service revenues ex. IC mobile internet messaging others mobile Internet continues to dominate revenue from data services 13
handset margin dropped from prepaid subsidy 52.4% % smartphone handset revenue THB billion 60.7% 60.9% 63.2% 65.0% 57.1% QoQ YoY -39.2% -38.7% 5.3 4.4 3.8 3.8 1.9 2.3 handset subsidies THB million QoQ YoY +483% +18.0% -54-152 -363-789 -754-889 steady increase in smartphone adoption driven by continued handset campaigns decline in handset revenue as a result of lower iphone sale, discount campaigns, and distribution of free handsets for prepaid subs prepaid handset subsidy returned amid intensified competition 14
cost of services under control cost of services THB billion QoQ YoY -7.0% -13.6% 5.3 5.6 5.3 5.4 5.2 4.8 1.0 1.0 1.1 1.2 1.0 0.9 1.2 1.4 1.2 1.4 1.3 1.5 3.1 3.1 3.1 2.9 2.9 2.5 regulatory network opex others * % cost of services % to service revenues ex. IC 18.3% 18.8% 18.7% 17.4% 17.7% 15.3% 7.4% 8.8% 7.3% 8.4% 7.9% 9.3% regulatory costs network opex % regulatory cost dropped from continued porting of subs to DTN and DR rate adjustment network OPEX increased along with expansion of 4G and 3G networks ongoing programs to improve operational efficiency * excluding depreciation and amortization, and IC 15
normalized SG&A stabilized QoQ SG&A expenses THB billion QoQ YoY -2.0% +13.3% 4.6 3.4 3.7 4.0 4.2 4.2 2.3 1.7 2.1 2.2 2.0 1.7 0.3 0.2 0.2 0.2 0.2 0.2 1.5 1.8 1.6 2.1 1.8 1.9 * % SG&A expenses % to total revenues 10.7% 9.8% 10.3% 10.3% 7.6% 8.0% 9.7% 8.2% 8.9% 7.7% 8.4% 6.4% S&M expenses increased from higher competition and launch of new services general admin expenses well under control continued focus on cost control S&M bad debt gen admin S&M gen admin * excluding depreciation and amortization 16
solid EBITDA margin development EBITDA (before other item) THB billion QoQ YoY -9.8% -1.8% 7.4 7.3 7.1 6.7 6.7 6.6 EBITDA margin EBITDA margin EBITDA margin ex handset 44.3% 41.3% 41.8% 41.9% 42.9% 37.8% 35.9% 32.3% 33.8% 33.4% 30.7% 29.0% excluding handset, EBITDA improved both YoY and QoQ, mainly due to lower regulatory cost EBITDA margin slightly declined QoQ mainly as a result of higher handset subsidies, partly offset by lower regulatory cost excluding one-time adjustment on prepaid revenue, EBITDA slightly increased YoY 17
THB0.42 per share dividend for H116 THB per share (top) THB billion (bottom) 0.97 net profit 0.58 0.52 0.42 QoQ 0.53 YoY -88.7% -89.7% 0.06 2.3 1.4 1.2 1.0 1.3 0.1 operating cash flow THB billion 7.4 6.7 7.1 6.7 7.3 6.6 5.5 3.2 3.9 4.7 7.6 4.3 1.9 3.6 2.8 2.6 2.3-0.6 operating CF (ebitda-capex) capex key financial ratios 4.0 3.3 3.2 2.2 2.5 2.6 0.8 1.0 0.9 1.4 1.1 1.1 net debt:equity* net debt:ebitda Decline in net profit is mainly driven by lower EBITDA and higher D&A charges OCF remains solid CAPEX level is on track to meet full year guidance financial ratios improve from last quarter In addition, THB394m one-time restructuring cost also have significant impact equity. 18 * excluding other component of shareholders
strategic direction and outlook
strategic direction no. 1 digital brand vision goal Empower society by connecting people to information, content and services that matter to them, helping to improve their lives, and securing a better future for all To be the no.1 digital brand in Thailand, by being our customers favorite partner in digital life digital disruptor 20
2016 outlook revised slight decline from previous year 31 33% same level as previous year service revenues ex. IC growth EBITDA margin capex 21
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. Investor Relations E: ir@dtac.co.th T: +662 202 8882