Revenue at Thailand’s three main mobile operators – AIS, DTAC and True Move – will likely remain flat this year after a 7 per cent increase last year.

A report from Fitch Ratings said economic conditions in the country are expected to improve. GDP growth picked up in Q2 after a 0.5 per cent fall in Q1.

But the agency expects that the strong growth in data revenue, which was up 28 per cent in H1, will only be enough to offset the the steady fall in voice revenue, which was down almost 11 per cent in the first half.

Voice revenue remains under pressure due to intense competition in the saturated market. Thai consumers, like their peers across the world, are replacing voice calls and SMS with free services from social messaging apps like Facebook, Twitter, Skype, Line and WhatsApp.

Fitch also forecasts a jump in marketing costs over the next 18 months as the operators push smartphone adoption and migration to faster 3G networks. However, it said the increase will be offset by lower regulatory costs as more consumers migrate to their 3G networks.

As a result, Fitch expects EBITDA margins to improve 1-3 per cent this year. It said in the first half of the year the aggregate EBITDA margin for the industry increased to 34.7 per cent from 31.9 per cent a year earlier.

Over the first half, it said all three were able to maintain their market shares based on revenue — AIS 52 per cent, DTAC 31 per cent and True 17 per cent. Based on connections, AIS had a 45 per cent market share in Q2, DTAC 29 per cent and True 25 per cent.

AIS added two million connections in H1 while True picked up 520,000 and DTAC gained 100,000, according to GSMA Intelligence.

Fitch said free cash flow is likely to be negative for the three mobile players due mainly to the high cost of building out 3G networks. But it noted that AIS and DTAC have “plenty of ratings headroom, which provides them with sufficient financial flexibility during this investment cycle”.