Thai telecoms operators face increasing pressure on revenue and ARPU as data growth is forecast to slow over the next two years, said Fitch Ratings.
The rating agency warned that the country’s mobile operators’ data revenue might not grow sufficiently to offset declines in legacy voice and SMS revenues, resulting in a drop in overall service revenue over the next two years.
Market leader AIS saw growth in non-voice revenue in Q1 fall to 21 per cent from 33 per cent a year ago, with service revenue flat year-on-year. Number two dtac reported a 5 per cent drop in service revenue as non-voice revenue growth of 10 per cent was not enough to make up for a 15 per cent drop in its voice revenue.
AIS and dtac accounted for around 80 per cent of total service revenue last year.
Increases in ARPU will be limited by competitive pressure and the continued offerings of unlimited data or large data packages, Fitch said.
Growth in data subscribers also has started to slow down in the last few quarters as smartphone penetration rises, with increases in data usage for existing data subscribers not translating fully into higher revenue, given the fierce price competition in data.
Smartphone penetration in Thailand is about 60 per cent.
Fitch believes that the growth in data subscribers will continue over the next two years, but the pace will be slower as Thai operators push deeper into the lower-tier segment. These users are generally more reluctant to change to a smartphone and less likely to benefit from 3G and 4G data networks. Operators may need to offer more incentives, such as deep tariff cuts and handset subsidies, to accelerate data service adoption, Fitch said.
In the medium term, non-voice revenue growth will be driven by subscriber growth. However, operators will need to monetise data better to achieve revenue growth in the longer term when data penetration approaches saturation. This will require the ability to adjust data pricing to move away from unlimited and large data allowance packages to a strategy that charges subscribers according to their usage.
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