Thailand’s second largest mobile operator dtac reported a sharp drop in operating profit for Q2, as revenue continued to slide and its user base shrunk.

The operator, with a 30 per cent market share, saw its operating profit fall 68 per cent year-on-year in Q2 to NOK174 million ($20.8 million), which it attributed to restructuring costs of NOK92 million and increased depreciation following network expansion, particularly on its concession network that has a short depreciation period. In local current terms operating profit fell 75 per cent.

EBITDA dropped 1.6 per cent to NOK1.54 billion on revenue of NOK4.63 billion, down 3.4 per cent during the quarter. Adjusted for one-time items, EBITDA in local currency increased 2 per cent. Total revenue in local currency terms decreased by 10 per cent, which it said was primarily driven by lower handset revenue, a reduction in the interconnect rate and a smaller subscriber base.

Its mobile revenue declined 2 per cent to NOK3.71 billion. A decline in prepaid revenues and increased marketing spend, including prepaid subsidies, was more than offset by contract revenue growth and lower regulatory costs.

According to Fitch Ratings, dtac’s service revenue has fallen year-on-year for the past nine quarters and its service revenue market share, excluding interconnection revenue, declined to 27.5 per cent in Q1 from 28.6 per cent in 2015 and 29.7 per cent in 2014.

Interconnect revenue in the quarter dropped 27 per cent to NOK271 million, which was due to the mobile interconnect rate being cut from THB0.45 to THB0.34 a year ago.

Its subscriber base fell 7 per cent year-on-year, with prepaid connections decreasing by 1.65 million due to the government introducing registration requirements last year. Its postpaid base grew by 13 per cent or 534,000 subscribers year-on-year.

ARPU in local currency increased by 5 per cent. Adjusted for the clearing of non-registered prepaid SIM cards, ARPU declined slightly as the decrease in voice, messaging and interconnect was not fully offset by growth in data usage.

Capex increased 37 per cent to NOK1 billion as it added 6,100 base stations, including 5,300 4G sites.