Good morning, everyone. Welcome to our 2023 result conference call. First, let me introduce our management. Our CEO, Khun Somchai.
Good morning.
Our Deputy CEO, Khun Mark.
Morning, everyone.
Chief Consumer Business, Khun Pratthana.
[Foreign language]
Our CFO, Khun Montri.
[Foreign language]
Our Head of Investor Relations and Compliance, Khun Nattiya.
Good morning.
Myself, Soumretai will be briefing you the results and running this session. The session will begin with a short brief and then going directly into Q&A. At this time, you may also reserve to ask questions through the chat box. Please type your name and corporate name. Now, let me begin with our presentation. Thailand economy and tourist recovery experienced modest growth amidst the fluctuation of global geopolitical situation, as well as grassroots purchasing power remain challenging. AIS showed solid growth in core business with our commitment to quality, aiming to elevate customer experiences. We also received a positive impact on our top line growth from 3BB acquisition. We take principle in profitability focus in both bringing in profitable revenue, as well as continuously streamline operational efficiency in all areas to generate strong cash flow and maximize the return to all stakeholders.
In mobile business, this is the first year that our mobile revenue turned positive against the decline over the last three years. The positive impact came from our consistent effort in executing value-based focus on offering personalized packages, as well as acquiring quality subscribers. Our net add has turned positive in the last quarter, benefiting from seasonality after a few quarters with transition period that we fixed the rotational churn and with effect from stricter control of personal identification. Our 5G subscribers reached 9.2 million, with 5G coverage nearly 90% of Thailand. We achieved a 35% growth in broadband revenue from our acquisition of 3BB, and our organic growth in acquisition of quality subscribers in the upcountry areas that attracted to our value-based convergence proposition, quality service, and innovative products.
Our subscriber now reaching 4.7 million, and with 13.3 million home pass across Thailand. Enterprise growing 10% year-on-year, despite economic challenges and political uncertainty during the year. The emphasis was on high margin service beyond connectivity, leading by cloud and platform solution. The highlight from this year and from the fourth quarter is that we acquired 3BB and 19% share in JASIF infrastructure fund. We consolidate 3BB for 46 days in fourth quarter. The impact expand our balance sheet and leverage ratio, but our ability to generate operating cash flow would keep us in the investment grade rating.
With the synergies combined, we now grew our subscriber market share up to about 46%, increased our revenue size, and potentially the broadband business would contribute to AIS 18% of core service revenue. For the performance of 2024, our core service revenue show a strong 4.2% growth, boosted by all positive factors, a rebound of mobile revenue growth, 3BB acquisition, organic momentum of broadband business, and also in enterprise business. Consequently, the EBITDA increased 4.1% year-on-year, driven by positive Triple T Broadband contribution and operational efficiency. With better operating performance, we delivered a net profit at 12% year-on-year, at THB 29 billion, 86 million. The board approved dividend per share of THB 8.61 for full year, a payout ratio at 88%. When comparing with our previous guidance, our revenue and EBITDA-
Compare with previous guidance.
Revenue and EBITDA of 2023 is slightly below our guidance due to weaker than expected economy and higher utility costs. Note our CapEx that we accelerate 5G investment in 700 MHz network with NT partnership, so we increased the budget in the last quarter to strengthen our 5G, including this impact, CapEx was in line with guidance. So this year, our guidance is largely reflecting the inorganic growth from Triple T Broadband acquisition. Our core service revenue is expected to grow 13%-15%, leading by inorganic growth from Triple T Broadband acquisition, and momentum of organic performance in view of improved economic condition. EBITDA to grow around 14%-16%, with continuously execute cost optimization with 3BB synergy. The CapEx budget, approximately THB 25-26 billion.
The lower CapEx in 2024 came from the acceleration in last year for 700 MHz of 5G rollout and leverage on 3BB network. For our next event, we will have the analyst meeting on the fifteenth of February at 1:30 P.M. Bangkok time. This is an in-person session for participants in Bangkok. We would be sending out a registration link today to confirm the participation by Friday. We will have an online session arranged only for overseas participants, only which the link will be sending after we receive your confirmation. This is the end of the brief, and we'll start the Q&A session now. Please also type your name and also your corporate name. The first session would go to Ranjan from JPM.
Hi. Good morning, and thank you for the presentation. There might be a fire alarm at my site, so I apologize for any disturbance. Seven questions from my side, if I may. Firstly, like there was a large jump in the finance costs in the fourth quarter. What is the reason for that, and should that be extrapolated? The second is on the guidance that you have given, if you can please break down like what the organic growth rates would have been without the 3BB acquisition complying from the guidance. Third, DPS at close to 90% payout, should—is, is that what we should be expecting going forward? I know you have maintained a dividend policy of at least 70%, but you've been paying close to 90%.
So if we should be thinking along those lines. Fourth question is on the consumer health in Thailand. I know you have indicated softness previously. So just wondering, how much room is there to improve ARPUs in Thailand given the health of the consumer? Fifth question is around 5G. A lot of comments around 5G investments and use cases. Maybe you can elaborate, like, what is the ARPU uplift that you're seeing from 5G adoption? And if there's any 5G specific use cases that you're seeing emerging in Thailand. Sixth question is on the data center side. A lot of interest that we are seeing from investors in data center builds around the region.
If you can highlight to us, please, how would AIS differentiate its data center builds from the other data centers, data centers being built in Thailand? And lastly, on spectrum, what are the other spectrums that could come to the market, and how does AIS view the needs to acquire more spectrum? Thank you.
Hi, let me take the easiest question on the question one first on the finance cost. Basically, we took a bridge loan to acquire 3BB at the Q3, Q4 this year. So I think majority of the finance cost incremental is basically based on that particular bridge loan. Yeah, and now also our right of use of JASIF. JASIF that we took from 3BB.
Can you understand, so the fourth quarter run rate on finance cost, can we extrapolate that, or should that come down? Because it is quite a sizable jump.
I think the level of leverage that we have, I think, will still continue for next quarter as well.
Got it. Thank you. Got it.
Your second question around the organic growth, on guidance, I think here it's rather difficult for us to segregate out 3BB, because now 3BB is becoming part of AIS. The way we look at the mobile business may not be much different with or without BB, 3BB. The opportunity in mobile is that, there are still certain number of customer of 3BB that are not yet holding AIS mobile SIM. So that's also a potential for us to tap into. Along the line, we also expect the mobile business to improve in terms of following the economic recovery this year. So hopefully, mobile itself can grow, better than last year. In terms of broadband, here, we really cannot say what would be the organic, because now we expand the footprint.
It comes along with the CapEx synergy, where areas that 3BB already have footprint, we don't need to add more investment, and therefore we can capture new sales of customer in those area with effectively lower CapEx, at least for the short-term period, as the capacity allow. Enterprise side, with the acquisition of 3BB, also comes with a portion of enterprise revenue as well, plus some of the staff from 3BB that can help us expand into the upcountry area from the enterprise side. So, really, this is what we can guide you based on the reported number. A question on dividend payout. As much as we can say, we keep the same policy. We can't guide on what is the outlook of the payout ratio.
Just bear in mind that in the next two, three y ears' time, we are still expecting upcoming spectrum auction to come in, so we also need to ensure that we prepare our cash flow and leverage level to be supportive of this execution when we need. And I think that touched upon the last point when you talk about potential spectrum auction, which at this point, we must say that we are pretty much open to look at all the spectrums that will be available into the market at the time of the spectrum auction, definitely there are gonna be technical evaluation, commercial evaluation, as well as financial evaluation of which spectrum we will be acquiring.
I would like to add more on the spectrum side. Until now, I still have unclear plan from the NBTC that will go to the auction in the new spectrum. Just only they talk about the available spectrum, that means 3.5 GHz for the 5G. However, as you know, in Thailand, we are two-player market, and AIS and True and DTAC also have 2.6 GHz for 5G already. That mean in the demand of the market, we are no need, especially in the 3.5 GHz, even NBTC willing to go to the auction, but the spectrum still unclear because they are also using in the broadcast in some spectrum bandwidth, something like this, nah?
However, more important thing that we still both of us, AIS and True and DTAC, also have the spectrum 2.1 and 2.3 from the NT, meaning TOT and CAT in the past. It will run out of the period, maybe a next 2-3 year. I think that is more important to ask for NBTC to re-auction this spectrum, because we already used it. However, based on that period, when AIS and True and DTAC acquired 2.1 and 2.3 from TOT and CAT, it's very expensive. I think should be when they go to the auction in the new round, should be cheaper, not the cost over than the past.
This is the thing that would like to give you some information about the spectrum. I think, in our two player market, both of us don't worry much. It's not like the past, that we are run out of the spectrum to do the business based on the NBTC cannot setting up. So the competition is very fair now, on spectrum case in Thailand, should be not the serious. However, we still consider every option that we have to acquire the new spectrum based on that Khun Nattiya talked to you, technical evaluation and also market, and also pricing evaluation also.
For number four, regarding ARPU improvement and rooms, for this 2024, we do believe that there will be improvement in term of economies. We believe there are rooms for consumer to spend more, to use more on the digital product and service, so we believe there are rooms. Providing as well on the landscape that whereby Thailand continue to withdraw the unlimited plan, which is irrational price, on this, so there are rooms. Somehow, it's also up to how fast the economy pick up as well. So I think that's number four. For number five, the 5G right now, AIS has been continue on improve 5G coverage and qualities. And in the investment of 5G, is also backward compatibles to support 4G as well on, wherever it require the capacities.
At this point of time, the ARPU improvement still running around about 10%-15% on the 4G to 5G. We expect to narrow it down a bit when it go to mass market on 4G to 5G. And this year, we do expect to have more 5G device coming into play in the market as well.
So, Ranjan, I will take your questions on 5G use cases. So we are seeing quite good interest and, in some areas, take up of 5G in the enterprise areas. So private networks, augmentation, well, not augmentation, deployment of 5G in factories that try to be smart factories, in building coverage, in new intelligent buildings. So I think the new cases are coming in. We are also deploying an enterprise orchestration platform, a cloud management platform called Paragon. This is a platform that we took from Singtel. This has helped us in, I think, fulfilling certain unique use cases in factories, such as monitoring consistency of electricity current for certain car manufacturer, et cetera.
Because these are quite new use cases, we are encouraged by some of the new things that we are doing. For example, we are deploying in a private 5G network for a mining company that's going to use autonomous excavators in the center part of Thailand. So encouraging take-up, encouraging pipeline in the enterprise space for 5G. On the consumer space, we are testing a few new ideas, such as our living networks with new 5G modes, use modes, satisfying, well working for people who need faster download, social media folks who want to have a faster upload, or gamers who need a lower latency. But on the enterprise space, there's been interest, but I think we still need to tweak a bit before we go full launch.
But on the consumer space, on the enterprise, encouraging uptick. DC, data center, I think what you will see is the GSA DC that we are building, will be ready for service April next year, on schedule. High density, computing sort of DC, delivering, initially 20 MW, suitable. So it's gonna be green, sustainable, having all the right badges in sustainability. It will be suitable to do liquid cooling, supporting AI operations if need be. How do we differentiate?
Well, it will leverage on, I think, all the partners' strength. Gulf will bring in sustainable, renewable energy inputs. Singtel will bring in the connectivity across the region, as well as hyperscaler customers, because Singtel is already serving some of these customers, in Singapore and other parts. Yeah. Thank you.
Got it. Thank you so much. Appreciate the comments.
Okay, second, we have on Piyush, HSBC, please.
Yeah, hi. Good morning, and, congrats for a good set of results. A couple of questions. Firstly, on CapEx, could you provide some color on the acceleration which we saw in fourth quarter CapEx? What proportion was it for NT partnership? How many BTS are kind of already deployed for this NT partnership? And what is the implication now going forward? Because you have brought down the CapEx guidance for 2024. Is this the new normal? Because now you have an enlarged footprint anyways on fiber broadband with 3BB. So will, will the new, you know, going forward, CapEx will be roughly around these levels in future? Secondly, on the cost side, in admin cost, there is some one-off due to obsolete asset provision.
Can you call out how much is the one-off, and what is the nature? And another on the cost side, marketing spend increased quarter-over-quarter. Is it a reflection of increase in competitive activity in mobile, or is it just seasonality? Thank you.
It may. On the CapEx, about THB 15 billion was to purchase 5 MHz of 700 MHz band from NT. And then there's a separate. There's a separate THB 14 billion on the NT 700 project, where we built the network and let NT use it. So that involves roughly about 13,500 sites for NT, about 3,000 have been delivered. So that accounts for the CapEx. CapEx because of the investment in that NT 700 network and the CapEx for building up the network, that is why you see a lowering down of CapEx for this year and next, likely.
You are not likely to see any jump in CapEx until the spectrum auction takes place, and then we figure out how much spectrum and what we need to build or not build. So, but for the next couple of years, you will see moderated CapEx on the mobile side. On the broadband side, you will expect synergies between FBB and 3BB because 3BB comes with its pretty large footprint network, fairly complementary, not much overlapping with FBB. In fact, the headroom in 3BB's network is pretty good, we'll say. So that will allow us to cater to demand over the next two years without too much increase in CapEx on the broadband side.
Enterprise CapEx, I think will not - w ill roughly stay about the same, unless there are other things, like, well, unless the demand for data center is so much, we want to talk about other new things. Yeah. But otherwise, it's roughly as explained.
Hi, Piyush. Let me take the second questions on the SG&A cost. Basically, I think it's to answer your question, it's seasonality. Q4, we put a lot of marketing expense to boost the demand on Q4, plus, we also have some asset impairment on the unused asset, and also take into account the SG&A of 3BB combined. So that's raised the amount of SG&A in Q4 this year. Yes.
Is it possible to know how much was the one-off asset impairment?
To be exact, THB 447.
THB 447 million?
Yeah.
Okay. And just on NT, you mentioned that only 3,000 has been delivered by end of 2023. So you still have 10,500 more sites to be delivered, so wouldn't there be an increase, like, continued CapEx for that? Or you are saying that THB 14 billion project for NT is already kind of done?
It's taken care of. It's taken care of in the THB 14 billion.
Okay. Got it.
Let me clarify on accounting basis. All the budget for NT has been deployed. However, cash flow-wise, that will completed after we finish and deliver the sites to NT. So that will continue to occur during the course of this year, as well as booking of the asset will occur after we deliver the site. So it will not yet fully reflected in the PPE. But on budget-wise, that's why we guided down CapEx this year to THB 24 billion, because we have pretty much accelerated what we need for the 700 MHz, which also enhance our coverage of 5G.
Got it. Thanks a lot everyone.
Yes, and on top of that, as we accelerate this investment in 700 MHz and deliver the 13,500 sites to NT, we start recognizing rental that NT is paying to us, according to the progress of the number of sites that we deliver.
Right. Timeline is still two years, right? To deliver all the sites.
We think we'll get it done by the end of 2024.
Okay. Perfect. Perfect.
Next, we have Kelsey from Goldman.
Yep. Good morning, management. Thank you for the opportunity. A few questions from my side. So firstly, how should we think about the first half versus second half seasonality this year for both your top and bottom line? And then my next question is, could you share about the fixed broadband subscriber growth and ARPU trends you're targeting this year? And last question is, could you give us an update on what's the latest competitive trends you're seeing for both mobile and broadband?
Okay. Your, your question is the general seasonality of the top line and bottom line. Oh, I think what we can say is that top line first, in general, in Thailand, fourth quarter and first quarter are the higher season. This come because one is a festive season. Secondly, we do receive more tourists, international tourists coming into Thailand. So our international international roaming revenue are quite high in those two quarter. Quarter two, quarter three, in general, are lower season. Quarter two is a school closure. Quarter three is a rainy season, so several crops are in the growing season, so people need to spend more money. So that's on, in general, for the top line. But, however, that probably applies more to the mobile revenue, not so much in the enterprise or the fixed broadband.
To the bottom line, I think the only key thing that may relate to seasonality clearly is the marketing side, because fourth quarter is a festive season, so we tend... we have the tendency to spend more in the fourth quarter with campaigns, privileges that we provide to customers.
If I may add, put a bit more context. Mobile penetration in Thailand is already 150%, so you would not expect, you know, it's gonna be a pretty mature market. Broadband-wise, household penetration is about 50%, so there will be growth, further upside, we believe, which is why we acquired 3BB. Enterprise, I think with the new government coming in, undertaking a lot of initiatives in stimulating the economy, we do think that there will be upside, in the enterprise sector. Yeah. I think you asked a question on FBB.
FBB, as mentioned, is covered in the 50% penetration. Well, it depends on the people's ability to afford and take up, broadband. Broadband is a, we think, is a key critical communications need in today's society. So take-up should be all right. ARPU trend, two players market unlikely to result in any surprises, downside. I think prices have been stable for the last quarter or so, last six months or five months, so unlikely to change, we think. But you should expect some innovation, new services coming in, such as those that we are pushing out, fiber LAN to every room. Maybe two pieces of fiber into a single apartment, that sort of initiatives. So you'll be able to see those. On the competition trend, maybe I invite to comment.
The second half, especially Q4, competition has been, I would say, stable. Lots of players now down to two players, focused on the qualities. We have been leading the market by most, putting innovation into play, upping the quality, as well as the new product to the market. We believe that the competition will follow, but in anyhow, our focus is really much toward the qualities, toward the innovations, to grow more value to the markets.
Yes, thank you very much.
We hope that answered your question.
Yes, thank you very much.
Now we have Khun Pisut from Kasikorn.
Yes, thanks for the call. Can you hear me well?
Yes.
Yes, this is from Kasikorn Securities. May I have a couple of questions? My first question regarding your operating guidance for 2024. It would be great if you can share with us a bit about what you expect your mobile revenue growth to be. Just around 4% is okay. My second question is about your heavy investment in 700 MHz last year. What basically, what would be incremental benefit in either form of competitiveness and also potential revenue upside you could get from this exercise, apart from the fulfillment of the NT contract? My third question is on your capital structure. As you see, the net debt to EBITDA jumped from the acquisition of 3BB. What is your target for net debt to EBITDA at the end of this year?
Considering your low, quite decent EBITDA growth target, and also a sharp drop in network CapEx for this year. My last question is about JASIF. How do you book the lease payment to JASIF in your PNL, either in the service cost line or is booked as ROU? And how would the ongoing capital reduction at JASIF level affect your investment item and your PNL? In what scenario you would have to set aside an impairment loss in this investment? Thank you.
I'll take the question on the use of 700 MHz first, because then, you know, you understand the mobile revenue increase that we see in 2024. On 700 MHz, the thing about 700 MHz is that it propagates quite far, so it gives good coverage compared to higher frequencies. So we'll deploy principally in the regions. So we will be able to get incrementally more coverage than other higher frequencies. So that is taken care of in the CapEx, that fourteen billion baht that Khun Nattiya earlier mentioned.
The upside, the benefits of that, actually, we started deploying in Q4. We turn it up, so you will note that has helped us in also regaining new customers in Q4. T hat we, we clearly see the benefit now, meaning good coverage, good service, good network, at lower cost, plus NT's involvement helps to alleviate some of our costs. On 2024 mobile revenue, Khun Pratthana.
Thank you very much. For previous question regarding mobile revenue guidance, I'd like to add more colors to the whole service that we provide for customer. The mobile service now has been strengthened by NT 700, with the coverage as well as the qualities in building. So we believe we provide superior mobile qualities products. Our mobile revenue, we do plan to grow around lower mid-single digit to 2%-3% on this plan. We pretty much go forward for better products to suit customer needs. Capital stock.
Net debt, net debt to EBITDA, I think this year, definitely the focus is on the synergy. We are expecting, because at the time we report, net debt to EBITDA may seem to be on a high side, because at the point of acquisition, it's close to 2.9 times net debt to EBITDA. However, in the next two, three years' time, as we realize synergy, and actually, immediately as we acquire, the EBITDA of 3BB is positive to us, so we already expecting the leverage starting from this year onward. Excluding any new spectrum auction, we believe that within the next three years' time, we can come back to the pre-acquisition level in terms of net debt to EBITDA. On your la -
On the accounting side, on the 3BB and JASIF so basically, the return of the capital reductions, basically will be reduced our investment on JASIF. And in terms of the rental that we've been paying JASIF so it's two line. One of the line will be is the cost of service, and another one is will go to the finance cost. So that's that's the structures of the accounting side on the rental ROU that we've been paying for JASIF.
Yeah. So just want to clarify a bit, that you book it as a ROU, and you depreciate it, and also.
Yes.
Pay the interest, is that right?
Yes.
Okay. Thank you very much.
Next, we have Arthur from Citi.
Hi. Hi, thanks for the opportunity. Several questions. Firstly, can you talk about your expectations on mobile pricing for 2024? When, when you look at the industry now, you're now a two-player market, your 3BB acquisition is done, all the other regional markets are raising rates. Thailand seems to be lagging on this side. What would it take to see prices going up within, within the market? Second question I had is with regard to, the NT deal on 700 MHz. Can I just clarify what your expectations are on the revenue and cost bookings for this item? Is this similarly structured to your 2100 MHz deal, for instance, with, with the NT? Also, if you can help us understand how the company approaches spectrum.
For instance, when you acquired the 700 band last year, that effectively raises your expenses north of THB 1.5 billion per year. How do we see it as actually, how do you actually evaluate that as, as generative to the company? And maybe last one is on 5G enterprise, because it was mentioned earlier. When do you expect this to be a meaningful contributor to the group? And how big can it be to your, your overall portfolio? Thank you.
Let me take the first question. I would say in Thailand, we try to eradicate or reduce the unreasonable price of unlimited. I don't think we can talk about, okay, we just hiked the rate and raising price. We're talking about providing good quality product and service and price it accordingly. So we do plan to continue and provide much better value, which better package as well. So we think that as a result, we improve ARPU rather than direct to hike the rates. And also, I think this is a very sensitive issue as well when it come to price, because consumers have perceptions that operator increase price irrationally.
But in fact, we are all price rational to the investments, as well as the quality of service we provide for customer to fund the continual and sustainable growth.
On 700 MHz revenue and cost, revenue side first, as I mentioned, as we deliver a number of sites to NT, what we had guided to the market earlier is that we will be receiving rental revenue of around 4,800 THB per site per month from NT. So a large part of what we deliver to NT will be definitely covered with revenue. But not all of this investment that we made is dedicated just for NT. It's an acceleration of our own 5G corporate work as well, as we see more 5G devices coming in. End of last year, I think we were still below 80% of 5G. And of 2023, before investment in the 700 MHz, our coverage was still not quite high.
But we are starting to see more adoption of 5G phones coming in, so we want to ensure that we are, we have leadership in terms of the coverage nationwide. So that broaden our opportunity to upsell 5G. And as Khun Pratthana mentioned earlier, that when we upsell 5G, we do get additional pull uplift of 10%-15%. So we want to make sure of that, 5G leadership proposition in the market.
Yeah. On the question of how we approach acquiring spectrum, actually, not all spectrum are meant to be equal. There are better spectrum and less good spectrum. So we start off by thinking about how we intend to provide coverage and quality of network. So the low frequency spectrum tends to propagate further, but carry less throughput. High frequency carries more throughput, but do not propagate further. So, the engineers will think about what kind of density of network in the cities, and then what kind of network in the regions. 700 is very good for the regions, because one base station cover far. And then eventually, you know, when it comes down to the financials of how much to pay for the spectrum, there are a few factors that are involved.
How many bidders are going to be in? What kind of CapEx avoidance we can get by acquiring a particular spectrum? And then what potential revenue we could generate out of it. So, that there are various factors. And then one very important factor we consider is, what kind of international adoption of the frequency is happening across the world? 700 is a major 5G spectrum, you know, with its device ecosystem, et cetera, so that's important to have. And then on the mid band, what operators call mid band, is a toss-up between 2,600, which is Chinese-led, or 3,500, more Western-led, with its own ecosystem. So it depends. So there are many factors to consider. Thank you.
Then let me elaborate on more spectrum strategy. As I told you, that when AIS are doing the mobile business, spectrum is really, really important resources for doing our business. When we consider the spectrum, when we not only consider on the technology side and price side, I mentioned to you, we also seeing our competitor movement also. This is all the thing that all the three factor that we evaluate how we can get the spectrum on hand to compete in the market. If you recall on the spectrum of 700, we used to get 10 megahertz in hand, the same as the True that get it.
When last two years, when we go to the auction on the 700, we also really need another 10 to be 20 on our hand. At that time, CAT come to auction at over the price that we that that means we walk away on the pricing. Let NT get it 10. We get only 5, if you recall. When we have the opportunity to do synergy and build the network with two NT, we also buy back another 5 to build our 700 to be 20, compared with two NT tech. This pricing is cheaper than the period that we auction, I think more than two years of depreciation. I think it's a very right strategy.
I think we got the 700, 20, 20 can compare with our competitor True and NT combined, another 20 also. This is all the thing that we are very careful and think in depth in our spectrum strategy also.
What was the last question again, if you don't mind, Arthur?
Yes, sorry. You mentioned 5G enterprise revenue opportunities. I'm just wondering when do you see this as actually meaningful, and how big can it be?
We think that it will drive our - it will help drive our enterprise non-mobile revenues towards double-digit growth for the next couple of years.
How big is that as a ratio of your portfolio?
Today, our total, enterprise non-mobile revenue, about THB 5 billion, THB 5 billion.
Understood. Understood. Yeah. Thank you.
Next we have Khun Wasu from Maybank.
Hi, good morning, and thank you for the call. I have three questions in total. The first one is about the JASIF rent. I think Kun Tri mentioned during the broadband strategy day that the impact of JASIF rent for this year on the earnings should be around THB 8 billion. So based on the THB 8 billion impact, how much will be booked as RU amortization, and how much will be booked as finance cost? The second question is about the competition. So we have seen lower data quota in the prepaid market in 2023, and also higher prices for entry-level fixed broadband packages. Can we expect further price rationalization in 2024? And the third question on the mobile business: So if you had to look, like, forward three years from now, what is the realistic ARPU increase per year?
Those are my questions.
Let me take the first questions. I think on the ROU that we went from JASIF. So basically, the depreciations and the finance cost is basically the proportion is 50/50. So half of which will go through the cost of service, and half of which will go to the finance cost.
Thank you.
On the competition and the pricing, on the second question, 2023 showed very clearly that the irrational pricing has been continuing and eliminates. I do not want to put it as the reduced quota, but more taking out unreasonable pricings of unlimited and super, super high quota, comparing to the normal, doable one. We can expect things to continue on, but more to see is new product and service, new packaging, which is intended to improve the overall value to consumers and invite them to spend more. So that's what you can expect for both mobile and broadband. So that's the second one. The third one on the... If I'm not mistaken, you asked about, what about three years from now, on the mobile?
We believe mobile, with high penetration, will continue on growing with value in low, mid-low single digits.
Thank you, Khun.
Next, we have Khun Thiti from KKP.
Hi, can you hear me?
[Foreign language]
Yeah, I have two questions. Number one, I think, I believe we have seen some negative impact on the bottom line, from the 3BB consolidation in the fourth quarter. But you do have a synergy plan for both the upsells and then the cost streamline. How long does it take, for the synergy to eliminate the negative impact from 3BB loss? And then the second question, you continue to cut the SG&A. If we compare that to sales, it used to be 6%, and right now it become down to below 6%. And going forward, do you think there's more room for cut, or we should assume that it would stay at this level as a percentage of sales? Thank you.
Synergies to be able to. Well, I think as Khun Tri tried to explain last time during the analyst meeting last year, it's a bit complex in terms of impact because of the book accounting basis. However, I think within this year, we are either expect to be neutralized or slightly dilutive depending on the items of the synergies that we can realize as well as some additional tax and tax loss carry forward that we mentioned earlier. So within the 1-2 years' time, I would say, to be able to cover the loss of 3BB. But we, at this point in time, actually, we had already started synergy realization on key items.
Let me add on to Khun Tri. I think because of the rental that we're paying on JASIF , I think it's quite higher than what we expected in terms of you know if we have our own assets. So I think in the next two years, you'll see still negative impact to the bottom line. But we also you know plan to have the synergies in terms of the revenue and in terms of the cost synergy among us. So I think that will compensate those negative impacts to the bottom line.
Right. Khun Kunak, when you said it will take about one year or two years to initialize the impact, we are talking about the bottom line, right? Not the cash. Because in terms of cash, it will be faster than that because you get THB 3 billion saving from the rental reduction. Is that accurate?
That's, that's right, CapEx to bottom line.
Right. Thank you.
Your second question on SG&A, is that related to the marketing spending?
Oh, yeah. I'm sorry. Yeah, not the whole SG&A, the marketing spending. Yes.
It would be around this level and maybe increase a bit. We do continue to expand on the strategic items, inclusive of expansion of ecosystem. So we do believe that it will be around this level, plus a bit.
Right. Okay. Thank you very much. That's very clear. Thank you.
Next we have Khun Supachai from Yuanta.
Hi. Good morning. My first question to CFO: I understand that you will have a gap between the cash outflow and the interest booking in your JASIF rental deal. I would like to know when the gap gonna close to the actual level that the cash outflow will happen. What time will we need to take to see that happen? That's my first question. My second question to Somchai on your target, you target the revenue growth around 13%-15%, right?
And you also target the EBITDA growth more or less at the same level, which mean that most of the revenue will go to EBITDA growth, in my opinion. And because in the previous year, you already booked a 3BB cost only THB 1.5 billion, which mean you're gonna cut cost significantly or maybe the 3BB cost will not happen in your EBITDA. Can you explain a little bit more about the logic of the EBITDA growth guidance? Thank you.
Let me answer on the guidance. I think the team we have the 2, 3 main business, call mobile, fixed broadband, and also digital enterprise, enterprise. We have the big new project that we establish like the data center and also enterprise. We also already have some plans to do the new project that's still not announced yesterday. That mean, I think we have the hope to increase our revenue, not only based on the normal operation that we have. If that kind of revenue that we plan happen, it will contribute in term of revenue and also EBITDA line with not effect on our operation cost. That mean we plan the budget like that.
Let's clear when the new project coming up, you will see some new project up.
Can you repeat your first question again?
[Foreign language]
I will answer in Thai. [Foreign language]
[Foreign language]
[Foreign language]
Khun Supachai, can I just get back to you on the first point you asked about? Because of the comment you said, the guidance on revenue is 13%-15% and then EBITDA roughly in that range, but our EBITDA is roughly 50% of revenue, so not all revenue increase will flow through to the EBITDA.
Okay. Okay. Thank you.
Next, we have Khun Mi Ling. She wrote the question in the chat box. So her question is the incremental D&A of ROU in 2023 is mainly from JASIF. Is this only for 46 days? If yes, D&A of 2024 should be up by around THB 3.5 billion. Is this correct?
If you look at the D&A comparison this year to last year, basically it's same similar amount of D&A. And I think there are some plus and minus factor inside. We also have some fully amortized 3G equipments in the year. And also we take into account the incremental 46-day from JASIF rental, which is around THB 800 million. So I think that will give you a picture that going forward there are also some fully amortized equipments. And at the same time, we also have NT 700 new equipment plus the D&A from JASIF rental.
Mi Ling, if anything not clear on numbers, you can work with our IR team. Just reach out to us. The last person, we have Khun Pratthana from Tisco, kha.
Thank you very much for the opportunity, and apologies for me not being able to turn on my camera. I'm having only one question. Regarding your CapEx guidance, regarding this year, your CapEx at around THB 25-26 billion, which I believe majority is coming from the acceleration of the 700 rollout that you have front-loaded your investment in 2023. But then if we think beyond 2024 to 2025, 2026, should we expect your CapEx spending to be around, like, THB 25-26 billion? Or should we expect it to go back to your normal range of around, like, THB 30 billion per year? Thank you.
Yeah, thanks for the question. I think we probably can comment on next couple of years, 2024, 2025, you will expect about the same level. As mentioned earlier, beyond 2025, it's hard to comment because it depends on the outcome of the spectrum auction, you know, what we get, what we need to build. For example, not a very good scenario will be 3500 being made available, and then we have to build. But since Khun Somchai also mentioned earlier, NBTC has not decided how they intend to run the spectrum auction, we can't comment beyond 2025. Yeah. Thanks.
So, just to clarify, if you're excluding the opportunities of new spectrum bidding, so it's fair for us to expect your CapEx spending at THB 25 billion-THB 26 billion for every year going now, going from now?
It's not simplified like that, because network CapEx always goes hand-in-hand with the spectrum that we have, right? So we can't freeze the amount of spectrum forever. If that is the case, while the consumption had continued to grow, that means we need to build in more CapEx. So it's always a combination of both. If we have a good set of spectrum at the right price, then it help us save the CapEx. However, new spectrum sometimes will also require new equipment, depending on which set of spectrum and whether it can be combined certain equipment with some of the existing spectrum that we have. So, cannot assume simplistically like that.
Got it. Thank you.
We think the time's up, so if you have any more questions, please reach out to us. Thank you for participating, and see you again in the analyst meeting. Let me remind you that we'll be sending the registration link today for your response within Friday. Happy Chinese New Year from us, and may all of us have an amazing year ahead. Thank you.
Thank you. Bye-bye.
Thank you.