DTAC profits shrink despite 13% revenue growth

Thai operator DTAC reported a healthy 13% increase in full-year revenues, to THB89.5 billion ($3 billion), thanks to the take-up of mobile data services, but the operator largely blamed more onerous revenue-sharing arrangements for a 4.5% decline in net profits, to THB11.3 billion.

Thai operator DTAC reported a healthy 13% increase in full-year revenues, to THB89.5 billion ($3 billion), thanks to the take-up of mobile data services, but the operator largely blamed more onerous revenue-sharing arrangements for a 4.5% decline in net profits, to THB11.3 billion.

Under long-established “build, transfer and operate” (BTO) arrangements, Thailand’s private-sector operators must develop infrastructure, transfer ownership of these networks to the country’s state-owned telecoms businesses and then pay the state-controlled companies a percentage of their revenues as a concession fee.

The BTO rate was increased from 25% to 30% of revenues in September 2011.

DTAC (Bangkok, Thailand), which is 65.5% owned by Telenor (Fornebu, Norway), also incurred an increase in operating costs, as well as depreciation and amortization charges, as a result of efforts to modernize its 2G infrastructure and expand the coverage of its 850MHz-based 3G network.

Further cost pressure came from weaker margins at DTAC’s handset business.

The 3G rollout, however, was held responsible for driving the adoption of mobile internet services, which led to a 49.2% increase in revenues from value-added services (VAS), to THB15.2 billion, between 2011 and 2012.

Although voice revenues fell by 1.7%, to THB43.3 billion, average revenue per user rose 1.5%, to THB270 a month, due to the increase in mobile internet usage.

Overall customer numbers were also up, growing from 23.2 million in the fourth quarter of 2011 to 25.3 million in the fourth quarter of 2012.

In October 2012, DTAC won a license to provide 3G services over 2.1GHz frequencies – widely used to support 3G technology in other parts of the world – and it plans to begin offering 2.1GHz-based services in the second quarter of 2013.

For 2013, it plans for THB8 billion in capital expenditure, expects revenue growth to a high single-digit rate from 13% in 2012, and is aiming for a margin on earnings before interest, tax, depreciation and amortisation of 30–31%, compared with 30% last year.

The operator will be helped by a reduction in Thailand’s corporate income tax rate from 23% to 20%.