Fitch Ratings today said it expects mean net debt/EBITDA will increase to 3.1x in 2021 (2020F: 2.8x) for Thailand’s three largest mobile operators – Advanced Info Service (AIS), Telenor’s DTAC and the mobile business unit of True Corporation.
Aggregate CFFO will increase to around THB111 billion (2020F: THB108 billion). This is insufficient to cover THB122 billion in capex (2020F: THB137 billion) and THB22 billion in dividends (2020F: THB26 billion).

Industry service revenue will expand by 2 percent- 3 percent, supported by a rebound in the domestic economy and continued growth in data usage. The sector’s median EBITDA margin should improve to 35 percent-36 percent (2020F: 34 percent), led by continued cost control measures and lower marketing expenses.

Price competition in the Thai telecom sector will remain rational. Operators are likely to shift their focus to profitability from market-share gains by reducing handset subsidies and have started to phase out generous unlimited prepaid data plans that were launched in early-2020. These measures should support gradual data monetisation and more sustainable data-centric business models.

DTAC could struggle to regain market share into 2021, as rivals undertake aggressive capex and spectrum investments to extend their leads in network quality. DTAC’s 2.3GHz network rollout over the past year has improved its network and increased net subscriber additions, but this may be short-lived as the two largest domestic mobile operators, AIS and True, step up their 2.6GHz network and 5G rollout investments.

Fitch Ratings said it expects sector investment, excluding spectrum payments, to remain high, at around THB75 billion (2020F: THB70 billion), as AIS and True increase capex to support their 5G rollouts.

AIS is rolling out a non-standalone 5G network and plans to launch the service in Q4 2020. DTAC is likely to pace 5G investment over the next few years to preserve balance-sheet strength.