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Advanced Info Service (AIS) Pcl (SET:ADVANC) (OTCMKTS:AVIFY), 40.45% stake owned by Intouch Holdings Pcl (SET:INTUCH) and 23% stake owned by Singtel Strategic Investments Pte Ltd., as of February 19, 2016, is the leading GSM mobile operator in Thailand with a total of 39.36 million subscribers and 52% market share by revenue, as reported at the end of second-quarter 2016. According to the Financial Times, the company operates in three segments: mobile phone and call center services, mobile phone sales, and datanet and broadband services. Advanced Wireless Network (AWN) Co., Ltd., formerly known as AIS Wireless Communication Network Co., Ltd., operates as an AIS subsidiary.
Advanced Info Service said on August 4 that its second-quarter 2016 revenues were 36.48 billion baht, missing the 36.69 billion baht consensus estimate by two analysts, according to the Financial Times. The company posted second-quarter 2016 earnings of 3.23 baht per share, missing the 3.26 baht per share consensus estimate of two analysts. Marketing expenses rose 92% year-on-year, to 3.1 billion baht, as AIS continued distributing subsidized handsets to encourage more users to subscribe to 4G services. AIS said that free handset campaigns were scaled down, but they may still have to offer competitive price plans to protect its market share.
The company said voice revenue in the second-quarter 2016 decreased 18% year-on-year and 5.3% quarter-on-quarter, following seasonality and the continued trend of voice-data cannibalization. Thai telecom operators will face increasing pressure as the rate of growth in data revenue is likely to slow in 2016 and 2017, Fitch Ratings said in a statement released on May 15 in a Reuters report. The growth in data revenues might not be sufficiently high enough to offset the declines in legacy voice and SMS revenues, resulting in a drop in overall service revenue over the next two years, said the rating agency.
AIS reported a dividend of 12.99 baht a share in 2015, which represents an 8.25% increase from 2014. The 24 analysts covering the company expect dividends of 10.61 baht a share for the upcoming fiscal year, representing a decrease of 18.34%.
The company said AWN, an Advance Info Service subsidiary, participated in the auction of the 900MHz spectrum on May 27, 2016 and won a license at the bid price of 75.65 billion baht. After AWN made the first payment of 8.04 billion baht, the license was granted by the National Broadcasting and Telecommunications Commission (NBTC) of Thailand and was effective from July 1, 2016 for 15 years.
The shares of AIS are now trading in a descending broadening chart pattern and bumping into a head resistance at the 186 baht level. The stock may break out along with the broader market, but still faces multiple resistances until it can break the 228 baht level. There are supports at the 135-150 baht levels, if ADVANC shares pull back. As of August 5, 2016, the consensus forecast amongst 25 investment analysts polled by the Financial Times advises investors that the company will outperform the market, with the median 12-month price target of 180 baht per share.
Disclosure: No position in ADVANC and no recommendation. |
