|
Total Access Communication Pcl (SET:DTAC), a 42.62% stake owned by Telenor Asia Pte. Ltd. and 22.43% stake owned by Thai Telco Holdings Co., Ltd. as of June 17, 2016, is the second largest wireless communication service provider in Thailand with about 25.5 million subscribers, of which 2.9 million are on the 4G network at the end of the first-quarter 2016. The company has two reportable segments, mobile telephone service and related services, and sales of cellular handsets and other telecommunications equipment through its World Media network of retail stores.
Telenor Asia Pte. Ltd. is based in Singapore and operates as a subsidiary of Telenor ASA, which is a holding company with 53.97% stake owned by the Government of Norway. Thai Telco Holdings Co., Ltd. is 51% owned by BCTN Holdings Co., Ltd., a company run by the Bencharongkul family, which founded DTAC, and 49% owned by Telenor South East Asia Investment Pte. Ltd., based in Singapore.
Total Access said on April 22, 2016, that its first-quarter 2016 revenues were 21.68 billion baht, missing the 24.5 billion baht consensus estimate of 7 analysts, according to the Financial Times. The company cited lower handset sales, declining voice revenue, and the reduction of the interconnection charge rate last year, to 0.34 baht from 0.45 baht per minute, that started on July 1, 2015. The company posted first-quarter 2016 earnings of 0.53 baht per share, beating the 0.43 baht per share consensus estimate of 3 analysts.
In the first-quarter 2016, DTAC said its service revenue dropped by 5% , as its non-voice revenue growth of 10% was not enough to compensate for a 15% drop in its voice revenue. 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.
Total Access said in a press release that during the first-quarter 2016, it expanded its 4G-1800MHz network to cover 50 provinces, while the 4G-2.1GHz network became available in every province of Thailand. Total Access plans to have 4G network coverage in every district throughout Thailand by the end of the third-quarter 2016 and 4.5 million 4G users by the end of 2016.
The company reported a dividend of 2.93 baht a share in 2015, which represents a 57.6% decrease from the previous year. The 23 analysts covering Total Access expect dividends of 1.29 baht a share for the upcoming fiscal year, representing a decrease of 55.94%. The next earnings announcement for the second-quarter 2016, is expected on July 12.
The shares of DTAC have been under selling pressure since mid-2014, after it broke down the bearish ascending wedge chart pattern. DTAC shares bounced off the 6-year low of 27.50 baht a share in early January and are now trading in the range between the 30 baht and 38 baht levels. As DTAC revenue growth continues to be under pressure, the stock could be range-bound for sometime, as no one can forecast the outcome of the price wars in the Thai telecom sector.
As of June 16, 2016, the consensus forecast amongst 26 investment analysts polled by the Financial Times gave DTAC a HOLD recommendation, with the median 12-month price target of 37 baht a share.
Disclosure: No position in any companies mentioned. No recommendation. |
