True Corporation Plc. reported positive momentum in service revenue driven by slow recovery of ARPU and ongoing subscriber acquisition. With the realization of quick-win synergies and efficiency initiatives, True delivered 14.7% higher EBITDA from last quarter.
Manat Manavutiveth, True Corporation’s Chief Executive Officer, said, “True Corporation is happy to report positive momentum in our performance as a result of ongoing subscriber growth and combined market execution strength of dtac and True. Having completed four months since the amalgamation, we are also pleased to report that our integration execution plan remains on track while we have already started to benefit from the realization of quick-win synergies. Favorable development in the macroeconomic conditions benefitted us while the competition aggression remained stable in Q223.
In line with our integration execution plan, True completed a thorough RFP process in partnership with global experts and successfully appointed vendors to carry out our network integration plans. We also benefitted from larger economies of scale, leading to the optimization of capital expenditure resulting in savings of approximately THB 3 billion since the amalgamation. Customers of dtac and True have been benefitting from the rich portfolio of products and services, leading to sequential month on month growth of cross selling, comprehensive ecosystem of converged solutions leading to improved customer loyalty, realizing revenue opportunities.
At the end of Q223, more than 29 million subscribers were benefitting from the diverse spectrum portfolio, wider network footprint and improved coverage and experience while using network roaming services. Additionally, from the improved network experience and coverage, dtac subscribers experienced a 2.3x higher 5G speed, resulting in 12% higher 5G usage.
True Digital Solutions continues to strengthen its solutions and propositions across all verticals by scaling and extending products to larger client bases both in B2B and B2C. True Digital Solutions has also enhanced its solutions through partnering with global companies, announcing the strategic partnership with China Mobile International to develop a world-class intelligent platform, enabling seamless connectivity between sensors, intelligent devices, machines, or Machine-to-Machine (M2M) communication on True’s 5G network in order to uplift industrial sectors.”
Sharad Mehrotra, True Corporation’s Deputy Chief Executive Officer, said, “dtac and True brands continue to be the leading operator of choice for tourist and migrant segments as a result of personalized and tailored content encompassing localized entertainment and social media propositions along with attractive bundling offers. Transactions under the privilege/loyalty programs increased by 17% QoQ mainly driven by the Better Together campaign, which also resulted in 9% higher retention of high-tier customers QoQ. As of Q223, the active digital user base of True Corporation reached approximately 14 million.
During the second quarter, mobile subscribers increased by 659K to 51.1 million, registering a growth of 1.3% from the previous quarter. 5G subscribers reached 8.3 million, increasing by 32.0% from Q123 with continued improvement in usage and ARPU uplift of 10-15% mainly driven by device bundling. At the end of Q223, True’s 4G population coverage reached 99% while 5G population coverage reached 90%.”
The macroeconomic situation continues to remain favorable with the ongoing return of tourists and migrants boosting economic recovery, along with lower inflation rates and reduced energy tariffs compared to the previous quarter. The intensity of competition in the ICT industry remained stable in the second quarter, with the reduction of discounted offers and increased focus on providing value propositions for customers by providing lifestyle benefits. True Corporation will remain committed to delivering on strategic priorities, utilizing our combined market execution strength, executing on integration plans and achieving synergies to deliver value for our stakeholders.
Nakul Sehgal, True Corporation’s Co-Chief Financial Officer, said, “True reported positive momentum in Q223 driven by ongoing subscriber addition and improving service revenue while benefiting from cost reduction from efficiency measures & synergy realization. The continued recovery of Thailand’s tourism sector resulted in improving prepaid acquisition for True, strengthening our position as the most preferred tourist and migrant brand in the country. Along with lower inflation and reduced energy tariffs, True maintained its focus on profitable growth leading to higher EBITDA and healthy margins in the quarter.
Higher contribution from mobile and online segments led to 1.1% QoQ growth in consolidated service revenue. Mobile service revenue increased 0.8% QoQ as a combination of ongoing subscriber growth and slow recovery of ARPU. Online service revenue grew 3.2% QoQ driven by ARPU uplift from market rationalization, focus on quality subscriber acquisition and utilizing cross-selling opportunities arising from the amalgamation. Revenue from product sales declined 28.5% QoQ due to lower sales from seasonality, leading to a decline of 4.6% QoQ in total revenue.”
Total OPEX excluding D&A reduced 16.7% QoQ from ongoing efficiency measures and realization of quick-win synergies. EBITDA for the quarter improved 14.7% as a combination of higher service revenue, OPEX reduction and net positive impact from reversal of provision pursuant to settlement of a litigation in Q123. Net Loss After Tax was reported at THB 2,320 million affected by one-time reversal of deferred tax assets on carry forward losses of DTN due to potential business restructuring within the group and integration costs of approximately THB 250 million. Net loss was also impacted by higher depreciation and amortization from higher rollout. CAPEX for Q223 was benefited by amalgamation related optimization and amounted to THB 3,435 million.
For FY 2023 outlook, True Corporation Plc. has revised its guidance for 2023, which accounts for the 10 months of operations from the date of the amalgamation. We expect to deliver low-to-mid single digit growth in EBITDA, while maintaining guidance on flat service revenue (excluding IC) and CAPEX of THB 25 – 30 billion as previously communicated.
Key financial indicators in Q2 2023 (on a pro forma basis)
- Service revenue excluding IC – THB 39,431 million, improving 1.1% QoQ
- EBITDA – THB 22,320 million, increasing by 14.7% QoQ
- EBITDA margin (to total revenue) – 45.4%
- Net loss – THB 2,320 million
