Thailand’s mobile players are facing increased competition, with all operators competing aggressively on data, and revenue in the saturated voice market forecast to drop 10-15 per cent this year after falling 12 per cent last year.
Competitive data pricing and handset promotions will be the key growth driver, said Fitch Ratings.
Fitch noted that TrueMove, the third largest operator by revenue, strengthened its financial profile and aims to gain market share outside of Bangkok, where voice services still dominate. Its focus on the provinces has helped it narrow the gap with the top two, with its voice share rising almost 2 points to 17.7 per cent in 1Q.
Dtac, the number two player, is likely to come under increased pressure as it continues to lose market share in both voice and non-voice services to market leader AIS and TrueMove. Dtac’s revenue market share in voice fell 1.1 points to 28.2 per cent in Q1, while its non-voice share dropped to 29.5 per cent from 32.9 per cent.
In the data segment, AIS is likely to benefit most from rising data usage given its wider network coverage. AIS invested heavily in its 3G network over the past two years and has strengthened its competitive position in non-voice service even though it does not offer 4G services.
AIS’s non-voice revenue jumped 33.7 per cent year-on-year in 1Q, faster than the industry’s 26.7 per cent expansion, Fitch said. Its non-voice market share rose 2.6 points to 50.5 per cent.
Although TrueMove has narrowed the market share gap with its competitors, Fitch said its earnings and profitability will remain significantly weaker than its peers. This is because of its relatively higher costs due to its smaller size and high marketing expenses.
TrueMove’s EBITDA margin (net of network rental revenue) was 12.2 per cent for the 12 months to March 2015, compared with 44 per cent for AIS and 33 per cent for dtac.
Fitch doesn’t expect dtac’s weakening market share to have an immediate impact on its credit ratings. It believes that the company will continue to benefit from regulatory cost saving as it migrates subscribers to the 3G licence system from the 2G concession system.