dtac third quarter 2008 -...

dtac

third quarter 2008

27 October 2008

Investor Relations: www.dtac.co.th

E-mail: [email protected]

Tel: 662 202 8882

2

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.



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3

full year target maintained

• Full year target maintainedoutlook for 2008

• Postpaid net adds gaining momentum

• Net adds on track to meet full year target

steady sub

growth

• EBITDA margin negatively impacted by unfavorable IC balance

and higher network maintenance expensesEBITDA margin

• Lower incoming traffic from other networks

• Lower inbound roaming revenues

• Higher risk on economic growth, and declining consumer

confidence and business sentiment

revenue growth

slow down



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operational highlights



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steady sub growth

1,121

515

1,069

866

681616

27

18

96

-113

164

-175

1,148

777 780

402

884894

Q207 Q307 Q407 Q108 Q208 Q308

Prepaid Postpaid Total

• Postpaid net adds gaining

momentum

• Prepaid net adds slightly dropped

• Total sub base at end of Q308:

18.2 million

– Postpaid 2.4 million subs

– Prepaid 15.9 million subs

net adds (000 subs)



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6

IC ratios & calling rate stabilized

54% 60% 64% 67% 68% 69%

45% 40% 36% 33% 32% 31%

Q207 Q307 Q407 Q108 Q208 Q308

on-net off-net

outgoing on:off-net traffic off-net incoming:outgoing traffic

• Lower incoming traffic from other

networks

• Average tariff for outgoing call

remained stable

46% 50% 52% 55% 55% 55%

54% 50% 48% 45% 45% 45%

Q207 Q307 Q407 Q108 Q208 Q308

incoming outgoing

Q107 Q207 Q307 Q407 Q108 Q208 Q308

avg. tariff for outgoing call



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277 267 262 240 232

9485 82 83

76 68

290

384363 349 344

317300

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming

287 291 284 260 253

9485 82 83

76 68

312

406372 373 367

336 320

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming

MoU & ARPU continued to decline

• Higher proportion of prepaid subs

• Mainly driven by lower incoming traffic from other networks

• Lower usage on average for both postpaid and prepaid also had a negative impact

blended MoU

-13.9%-4.6%

blended ARPU

-17.2%-5.3%



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postpaid

net adds (000 subs) MOU (mins/month/sub) ARPU (bt/month/sub)

• Strong growth in postpaid net adds

• Lower usage and incoming traffic from other operators

-21.8%-8.1%

-13.7%-7.3%

1827

96

-113

164

-175

Q207 Q307 Q407 Q108 Q208 Q308

520 508 470 410 382

130 128 132 147141 125

516

646 648 640 616552

507

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming

666 662 669 596 558

130 127 133 146143 127

682

812 793 795 815739

685

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming



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212 208 207 193 187

88 78 75 74 68 60

218

306 290 283 281 261 248

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming

prepaid

net adds (000 subs) MOU (mins/month/sub) ARPU (bt/month/sub)

• Higher portion of net adds were from upcountry

• Lower usage and incoming traffic from other operators

-9.4%-4.1%

-14.5%

-5.1%

1,121

515

1,069866

681 616

Q207 Q307 Q407 Q108 Q208 Q308

248 259 259 240 235

8878 74 74

68 60

274

362 326 333 333 308 295

Q207 Q307 Q407 Q108 Q208 Q308

outgoing incoming



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financial highlights



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11%

3%5%

23%

14%

44%

12%

3% 5%

22%

14%

45%

underlying service revenues

service revenues (THB million)

+2.0%

-1.3%

Postpaid airtime

Prepaid airtime

InterconnectionVASInternational

Roaming (IR)Others

Q308Q208 Q307

12,443 12,815 13,470 12,746 12,786

3,785 3,653 3,7413,958

3,886 3,629

12,179

15,964 16,097 16,55617,428

16,632 16,415

Q207 Q307 Q407 Q108 Q208 Q308

Service revenue IC revenue

8%3% 4%

23%

20%42%



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regulatory and net IC costs

-11.3%

+5.3%

revenue share, excise tax, and net IC as % of service revenues

1,519738 390 58

-152

9

4,251

3,7223,571 3,511

3,1373,302

Q207 Q307 Q407 Q108 Q208 Q308

Revenue sharing Excise tax Net IC

26.6%

23.1%21.6%

20.1%18.9%

20.1%

Q207 Q307 Q407 Q108 Q208 Q308



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cost of services

CoS excl. revenue share, excise tax, AC, and net IC

Note: Other CoS consists mainly of numbering fees, prepaid voucher,

roaming & IDD, and others.

+9.6%

+7.5%

7,826

416

Q307 Q208 Q308

No. of new sites 549 378

Total sites on air 9,017 9,395

3,216

3,684 3,778 3,807 3,7564,037

Q207 Q307 Q407 Q108 Q208 Q308

A&D Network OPEX Others



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2,233

2,7022,977

2,786 2,770 2,884

13.8%

16.6%17.7%

15.7%16.4%

17.2%

Q207 Q307 Q407 Q108 Q208 Q308

SG&A SG&A of total rev

SG&A

SG&A

+6.7%

+4.1%

SG&A as % of total revenues

4.5%

5.3%

4.0%

5.0%

9.1%

11.9%

11.1% 11.2% 11.1%

11.9%

5.3%

4.6% 4.7%6.7%

7.7%

4.5%

5.1%

5.7%

Q207 Q307 Q407 Q108 Q208 Q308

S&M of total rev. Prov for doubtful account

Admin of total rev



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5,130

7,879

5,720

4,8794,5634,682

5,458

Q207 Q307 Q407 Q108 Q208 Q308

EBITDA EBITDA ex. DPC

28.7% 27.7% 28.7%

32.2%

46.3%

30.3%32.1%

EBITDA margin EBITDA margin ex. DPC

EBITDA & net profit

EBITDA (THB million)

+12.4%-6.0% (excl DPC)

net profit (THB million)

+34.7%-10.6% (excl DPC)

1,836

3,905

2,346

1,5871,3621,333

2,053

Q207 Q307 Q407 Q108 Q208 Q308

Net Profit Net Profit ex DPC



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net profit jumped 35% YoY

34.7%1,362-10.6%2,0531,836Net profit ex. DPC

2.6pp27.7%-1.8pp32.1%30.3%EBITDA margin ex. DPC

12.4%4,563-6.0%5,4585,130EBITDA ex. DPC

13.5%2,600-48.7%5,7512,952EBIT

34.7%

-13.8%

2.6pp

12.4%

9.3%

0.9%

2.3%

2.8%

2.0%

YoYQ308 Q208 QoQ Q307

Service revenues (w/o IC)

Service revenues (with IC)

12,786

16,415

12,746

16,632

0.3%

-1.3%

12,443

16,097

Total revenues 16,725 16,880 -0.9% 16,351

Operating Costs (w/o IC)

Operating Costs (with IC)

10,335

13,973

9,906

13,640

+4.3%

+2.4%

9,457

13,849

EBITDA 5,130 7,879 -34.9% 4,563

EBITDA margin 30.3% 46.3% -16pp 27.7%

Financial Costs 497 524 -5.2% 576

Net profit 1,836 3,905 -53.0% 1,362



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operating cash flow

• Continuation of investment in

network coverage expansion

• New 378 cell sites on air in Q308

• 1,500 new cell sites target for 2008

maintained

operating cash flow (THB billion)

4.7 4.64.9

5.7

7.9

5.1

2.3 2.42.2

2.6

3.94.0

2.3 2.2

3.5

5.3

1.20.9

Q207 Q307 Q407 Q108 Q208 Q308

EBITDA Capex Operating FCF



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financial base

47.4

57.753.8 54.6

63.2 72.9

12.211.5

9.68.7

7.47.2

0.60.81.21.51.31.6

0.20.30.40.50.50.6

Q207 Q307 Q407 Q108 Q208 Q308

FFO to Total Debt (%)

Interest Coverage

Ratio

Net debt to EBITDA

Net debt to Equity

interest-bearing debt (THB billion) financial ratios

debt maturity profile (THB billion)

• Debt repayment of appox. THB 6.2

billion in Q308

• Low level of debt repayment in the

coming quarters

• High cash balance of THB 15.6 billion

35.7 35.730.9

35.9 35.1

28.9

Q207 Q307 Q407 Q108 Q208 Q308

0.8 0.7 0.8

9.5

7.2

9.8

Q408 Q109 Q209 H209 2010 2011-2015



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back-up facilities

7,011Trade Finance

12,416Total ST

5,405THB ST Facility

Short Term Facility

Long Term Facilities

unit: THB million

6,000LT Facilities from financial institutions

As of 30 Sep 2008



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regulatory updates & other issues



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regulatory updates

• Hutch & TOT negotiations are still ongoing at the NTC’ Dispute

Resolution

• DRC ruled that True Corp and TT&T should interconnect with dtac

IC

• The NTC is finalizing the licensing framework for another round

of public hearing early next year

• The public hearing has been concluded3G license

2.1 GHz

• The MNP regulation is expected to be published shortly

• The public hearing on MNP has been concludedMobile Number

Portability

• The Civil Court agreed with dtac’s petition on the jurisdiction of

the case belonging to the Admin Court

• The Admin Court will rule on the Civil Court’s recommendation

AC



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update on 3G

• dtac is in the process of selecting a network equipment supplier

• dtac is on track to launch 3G service in Q209

• Initial focus will be on wireless broadband services

• dtac also prepares for applying for 3G license from the NTC when it is open for

application



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23

outlook



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24

to counter impact of slowdown

Increase

share of wallet

Maintain

market share

momentum

Cost initiatives

full year target maintained



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outlook for 2008

• 95+% penetration by end of 2008

• 8 – 10 million net adds for the industry

• dtac targets to maintain its market share

• Mid single-digit underlying service revenue

growth

• 30 - 32% of total revenues (excluding the DPC

settlement)

• Approx. THB 11.0 billion (excluding 3G)

MarketMarket

SubsSubs

RevenueRevenue

EBITDA marginEBITDA margin

CAPEXCAPEX



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appendix



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registered vs active subs (in million)

15.316.0

17.0

18.119.2

20.2

14.5 14.915.8 16.7 17.4 18.2

Q207 Q307 Q407 Q108 Q208 Q308

registered subs active subs

dtac third quarter 2008 -...

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