Somchai: Foresees more growth in 2018
Revenue from mobile data will overtake voice revenue in Thailand for the first time this year, becoming the largest contributor to all three major mobile operators’ top lines, influenced by the phenomenal growth of smartphone apps and personal messaging.
Mobile leader Advanced Info Service (AIS) said its mobile data revenue will account for 60% of turnover, surpassing voice calls for the first time this year.
Second-ranked operator True Move and third-ranked Total Access Communication (DTAC) saw their data revenue overtake voice in mid-2016.
Thailand’s mobile data service has grown 20% annually over the past few years. For 2017, mobile data revenue of the major three mobile operators is expected to reach 170 billion baht, with 120 billion recorded in the first nine months this year.
As of September, AIS had 40.2 million subscribers, True Move had 26.7 million and DTAC had 23.1 million.
AIS chief executive Somchai Lertsutiwong said mobile data will continue to drive revenue in 2018, reflecting the changing habits of mobile device users.
“We expect our data revenue to account for 70% of the total in 2018, driven mainly by the Internet of Things, video streaming and a growing number of connected people and things,” he said.
True Move’s data revenue accounted for 66% of total revenue in the second quarter last year.
Data revenue for DTAC rose 19% to 11.2 billion baht in the third quarter of this year. Data traffic grew robustly because of the popularity of content streaming and “Go No Limit” price plans.
For DTAC, data revenue represented 69.9% of service revenue, up from 67.4% in the second quarter and 57.7% in the third quarter of last year.
AIS expects to keep its position as market leader with a 48.5% share this year.
Mr Somchai said AIS will focus on the corporate customer segment as a key growth engine next year. Corporate mobile service, intranet, fibre-optic links and ICT solutions will take centre stage in the operator’s strategy.
“We expect revenue from our corporate segment to account for 25-30% by 2020, up from 10% this year,” Mr Somchai said, adding that AIS had a 70% share in the 40-billion-baht corporate segment.
AIS’s planned acquisition of broadband provider CS LoxInfo (CSL) from its two major shareholders Thaicom (part of AIS’s parent group InTouch Holdings) and Singtel (itself a direct shareholder in AIS) is expected to help AIS effectively penetrate the corporate market.
Thaicom owns 42.1% of CSL through its subsidiary DTV Service Co, while Singtel owns a 14.1% stake in CSL. AIS’s preliminary indicative offer of 7.80 baht per share is open to further negotiation and due diligence.
AIS expects its fixed-line broadband subscribers to reach 500,000 by year-end after launching the service last year.
“We aim to be one of the largest players in the local fixed broadband market, with a 25% market share over the next three years,” Mr Somchai said.
Thailand’s mobile industry has shown no signs of slowing down. AIS expects to post revenue growth of 4-4.5% in 2017 after registering strong growth of 4.8% in the third quarter — exceeding the country’s GDP growth.
“Overall, the mobile market in 2018 is set to see stronger growth than this year,” Mr Somchai said.
He said telecom’s rapidly changing cost structure poses a critical challenge to operators, given the higher costs of technology investment.
Investments in analogue networks under the concession regime had a 10-to-15-year life cycle, compared with only three years for 3G and 4G technology investments.
AIS invested a combined 186 billion baht during the 25-year concession system, but it spent 120 billion on 3G and 4G networks over the past three years.
That comes on top of investment in the 5G network, which is set for 2020, Mr Somchai said.
Additionally, licensing costs in the mobile industry are unusually high, even as competition in the market has intensified and shows no signs of sustainable growth.
The planned auction of 5G licences is another challenge, Mr Somchai said.
He said mobile operators need to be nimble to cope with rapidly changing consumer behaviour, while lowering costs and enhancing competitiveness and efficiency.