DTAC Shares Break Out Trading Range Despite Intense Competition in Thai Telecom Market

Witawat (Ed) Wijaranakula, Ph.D.
Wed Jan 11, 2017

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 November 4, 2015, is the second largest wireless communication service provider in Thailand with about 24.8 million subscribers, of which 4.1 million are on the 4G network at the end of the third-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 October 20, 2016, that its third-quarter 2016 revenues were 19.54 billion baht, down 0.80% year-on-year, but beating the 19.35 billion baht consensus estimate of 6 analysts, according to the Financial Times. The company said total active subscribers dropped 0.1% year-on-year to 24.82 million. Voice revenues decreased 23% year-on-year to 5.46 billion baht, while data revenues increased 20% year-on-year to 9.34 billion, as more subscribers switched to smartphones. The company posted third-quarter 2016 earnings of 0.28 baht per share, down 46.15% year-on-year, but beating the 0.25 baht per share consensus estimate of 3 analysts. 

The company reported a dividend of 2.93 baht a share in 2015, which represents a 57.6% decrease from the previous year. The 21 analysts covering Total Access expect dividends of 0.86 baht a share for the upcoming fiscal year, representing a decrease of 70.65%. The next earnings announcement for the fourth-quarter 2016, is expected on January 30. 

From our technical viewpoint, the shares of DTAC just broke out the trading range between 30.00 and 38.00 baht per share, along with the broader SET index. The stock could head to the upper trendline resistance at around the 48 baht level, ahead of the earnings report at the end of the month. As a reminder, DTEC said in the third-quarter 2016 earnings release that intense competition in the Thai telecom market is expected to continue and revenue growth could stay under pressure. As of January 10, 2017, 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 35.25 baht a share.

Disclosure: No position in any companies mentioned. No recommendation.


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