Good morning, everyone. Welcome to AIS First Quarter 2022 Results Conference Call. This is Nattiya, head of investor relations. We have three management with us today. First, our CEO, Khun Somchai.
Good morning.
Our Chief Operating Officer, Mr. Goh Seow Eng . Our CFO, Khun Tee.
Good morning.
Before I begin the brief, may I remind everyone to kindly change your Zoom username to be your name, followed by your corporate name. You may also reserve your slot for the Q&A at the beginning by typing your name in the chat box. I'll begin with some brief, and then we'll go to the Q&A. As you see the result, we would say that the first quarter of this year is still impacted mostly by the Omicron strain, which has an impact to the consumer sentiment and especially in terms of mobile business. However, the broadband and the enterprise remain to receive a positive note from this. In terms of cost side, we have continued to manage quite decently. Therefore, in terms of the EBITDA, it remains quite flat year-on-year.
NPAT, however, declined year-on-year. This is due to mainly the acquisition of new spectrum last year. In terms of mobile business, competition remained quite fluid. We continue to expand our 5G in order to strengthen our leadership and ensure that we acquire the strong quality subscriber. The unlimited price plan in terms of mobile competition remains in the market. We also observe some heightened competition in the month of April. Because the rising inflation and the situation around the consumer sentiment, we believe the situation around the price competition will remain challenged for the rest of the year. In terms of fixed broadband, this quarter, we have added around 93,000 subscriber, which is considered to be quite strong even though slightly below what had happened last year.
Last year, we also have some positive tones from the government spending, but this year, we continue to believe that we have a solid demand for the broadband coming in. Enterprise as well, as we have made the strategic partnership with Microsoft last year. We have observed a nice increase in terms of cloud business, where enterprise customer have been increasing in terms of their demand, and therefore the enterprise business continue to grow close to 30%. Overall, because of the dip in terms of revenue, but there are still much of it for us to execute for the rest of the year, so we have yet to revise our guidance. We still stand on our top-line guidance of mid-single-digit%.
We expect that within the second half of the year, more traveling traveler segments and consumer sentiment could gradually picking up as well as we intend to utilize our 5G leadership in bringing in more mid-tier handset and continue to drive the adoption of 5G that giving higher level of ARPU. Broadband, as mentioned, we believe there continue to be a solid demand, so we still target a 2.2 million subscriber by year-end, as well as on enterprise. On the EBITDA, as mentioned last quarter, this year, because of the recovery of the economy and the drive on 5G, we will expect some rise in the marketing spending.
Might not see much of that yet in the first quarter of the year, but as the economy is recovering, more events will be happening, mostly toward the second half of the year. We're still expecting the EBITDA to grow at a low single-digit . Lastly, on CapEx, between THB 30 billion-THB 35 billion excluding the spectrum payment. That mainly is to serve the expansion of 5G, ensure that we continue to invest for a quality network. Expansion of 5G in terms of population coverage will be using mostly the low band, as well as the AIS Fibre, which we target 2.2 million. That means we will expand into some new area as well. Some part of the CapEx will be allocated for that.
However, I think for the rest of the year, if the economic situation is not as we expected and if we observe some soft demand, there's always a possibility for us to, you know, looking at these investment and whether we need to revise it down is yet to be seen. That's all for the brief. We now like to open the floor for Q&A. As mentioned, please reserve your position by typing your name and corporate name in the chat box, waiting for us to call upon. First question from Khun Pisut, Kasikorn Securities. Please unmute.
Hi, good morning. Can you hear me?
Yes, Khun. Please go ahead.
Okay. Thanks for the opportunity. This is Pisut from Kasikorn Securities. May I have three questions? The first one, your first quarter core revenue and EBITDA were short of your full year guidance. You keep your guidance unchanged, and you just said that the price competitions will stay challenging throughout the year. Please share with us key drivers are you expecting to boost the growth of core revenue and EBITDA for the remaining period of the year? This is my first question. My second question's regarding the tax charge that I noticed that is quite up a bit. Why did the effective tax rate in this quarter increase to 19% from, I think, around 17% plus minus previously, if my calculation is correct?
Will this 19% tax rate be applicable for the rest of the year and also next year? My last question's regarding your negotiation with the NT on spectrum and facility rental fees that I think Khun Somchai used to mention before. Should we expect to hear any good news on this by this year? What could be the magnitude of the cost saving, if you can share? Thank you, Khun.
Maybe on the second question first, the tax charge that has increased. This is because if you recall, since 2016, we have a number of the government tax incentive where we receive the reduction of the tax for about five years. Some of those program have already ended. Basically, I think this year we are expecting the effective tax rate at around 19% as what you see. Next year, I think it should remain around this level as well. Your first question on the shortfall from guidance and the key driver, let me begin with that and maybe management would like to add anything. On mobile, I think one of the key driver definitely is on 5G. We intend to drive 5G.
As of today, we continue to see the adoption of 5G bringing an upward in terms of the ARPU. The ARPU uplift remains, you know, close to 15%. We expect more of the mid-tier 5G devices to come through. That's number one. Number two, I think for the existing subscriber base, we also have been using data analytics to manage what we call customer value management in order to try to upsell, churn management, and try to increase their spending with AIS through cross-selling and upselling. For example, they're using our mobile, they have not been using our broadband yet or not yet on the digital content. We'll try to encourage them through the multiple services that they can have with us. That's on the mobile side.
Fixed broadband will definitely be the key elements that help the top line. As you see, we have been expanding in terms of our market share nicely. The quality of the fixed broadband subscriber has also come in good quality, and this help us increase the revenue per household. We continue to target the existing AIS mobile subscriber base to be expanding the usage of our fixed broadband. Enterprise, despite still being quite small to the revenue portion, around 3% -ish, it continue to grow very strongly. We believe that currently we have a good position with the preparedness of our staff and organization to push forward with the enterprise segment.
I think that's all, Khun Nattiya explained you about how we still have the hope on the Q2, especially in the second half. Not only on the internal market that Nattiya told you, we see the positive side when the country open in the second half should have some new source of revenue that we've gone on the COVID situation, like the tourist or the roaming revenue something to compensate this matter. I think all the revenue down is not only on the competition itself, it also on the economy also. If you compare this quarter with the last year. Why last year the revenue can grow? Because on that time, NBTC also subsidized some program for the consumer also.
This is the thing that we will do. We'll monitor on the Q2 result before we adjust or change any guidance as Khun Nattiya update you. I would like to reply you on the NT 700 MHz of NT. We proposed the proposal that I update to all of you last quarter. The good news that our proposal got the approval from the board of NT, but I still don't announce in the public because in detail, this project really need to come to cabinet to approve.
I think we have the good side. Let's say in the second half, if all the projects happen, we should have some sharing revenue on our five-year investment to utilize all the network sharing with the NT also. Let all the processes pass by the Cabinet, because this is a long-term cooperation with the NT between AIS and NT.
Thank you. May I add a little bit on my last question? You used to mention about the negotiation with NT about the rental fee. I'm not sure about on both spectrum and also on the tower rental and also facility rental, that you noted that the rate that you pay is higher than your competitors and you are trying to bring it down. Could you please update us about it, this one as well? Thank you.
On the rental fee, still in the process, because we do step by step. If you remember, we clear all the some application and some cost case that the first one. Now we talk about the NT 700 MHz that I update to you that we got approval internally from the board. All process still not finished. On your rental tower, we still are in the process because they have to have a reason how they can reduce. That means we have some negotiations. Still are in the process. Not final yet.
Very clear. Thank you.
Thank you. Next question from Khun [Wasut, Bank of America] . .
Thank you for the opportunity. I have three questions overall. The first one is about the number of prepaid subscribers. At the end of the first quarter, AIS had around 33 million prepaid subscribers, which is almost on par with the pre-COVID level of prepaid subs in the fourth quarter of 2019, even though the tourist arrival is nowhere near the pre-COVID level yet for Thailand. Could you please explain why AIS has so many prepaid subscribers? Should we expect the prepaid subs to rise further now that the tourist arrival is recovering during the remaining of the year? The second question is about the hearing for the focus group on the topic of the merger of True and DTAC.
During the hearing, I heard that one of AIS representatives stated that True and DTAC should not be allowed to combine their spectrum licenses. If they combine the spectrum licenses, AIS should be compensated accordingly. Could you please elaborate on the legal grounds for this argument by AIS? My third and final question is about the joint ventures that AIS is planning. Could you please give us the latest updates on the digital lending and data center joint ventures? Thank you.
First question on the subscriber of the prepaid. As you mentioned that now our prepaid sub base has increased quite a lot. Yes, hasn't had impact from the tourist segment yet. Throughout this year, as the country is reopening, we also expect the prepaid segment to come in a lot more. I think this is also as we continue to be focused in each of the area we operate and ensure that we gain a fair share in the number of areas that we compete with our competitors. We continue to ensure that we execute that throughout the year. That's in terms of prepaid. Second question maybe our CEO.
I will update all of you on our AIS position on the merger call, based on our corporate governance stance. Now, even merger may be, as you all know, that may benefit us in the long term, like the fewer players in the market. However, as the direct independent director also ask us to show our standpoint in the market that should give all information to the regulator called NBTC to know all the things. Now, we point out why the merger it should not happen because may be against the law. Even some people said they can do based on the announcement of NBTC, but our legal also see that by the law, it should not. It's very, very illegal something.
This is our position to show them in the public. Another thing that you ask me why we ask for some compensation on the frequency. Based on the auction period. If you remember, when we auction in any slot, there are different cost and price. That mean when they are merged together, they have the opportunity to reallocate or set up that kind of allocation of the frequency. That's why we ask for some compensation. Actually, today, even the law allow to transfer the frequency among like AIS and NT or True and DTAC something. They have to pay the transfer fee something. If they merge, they can get it for grant, no need to pay that kind of thing.
That means the legal grounds that we ask them to compensate us in this matter. Nah.
On third question about the progress on joint venture. On digital lending, I think it take us a bit longer to develop the platform and the system. I think we do expect to start the service by, I think the second half of this year. It's about a quarter-ish delay. On the data center, I think we are at the final stage of finalizing the plan. Hopefully within this quarter, we'll announce to the market what the structure would be.
Thank you. Maybe one follow-up question. During the pre-COVID times, for example, in the fourth quarter of 2019, how many prepaid subscribers or SIM cards were coming from migrants and tourists? Like, out of the total 33 million prepaid subscribers.
I can get back to you on that later on.
Okay. Thank you.
Next question from Piyush, HSBC.
Yeah. Hi, good morning. Thanks for the call. Three questions for me. Firstly, you know, some of it has been discussed, but just want to understand, like ARPU is down, right? Quarter-on-quarter, and you've given the reasons. If we are seeing an improvement in 5G ARPU and 5G adoption, what is the underlying trend ex-5G subs? Like how much is the ARPU down for that segment? And, you know, what would be the driver for that segment to increase ARPU? It's just the consumer sentiments improving and reopening the economy or there could be other factors, which would drive? That is the first question. Secondly, the roaming revenue. Could you share what proportion of your total mobile service revenue is today from roaming?
What it was in the fourth quarter of 2019 before the COVID? Third question is on what is driving fixed broadband ARPU increase quarter-on-quarter and the outlook for the same?
Okay, Piyush, this is Goh Seow Eng. I'm the relatively new COO for AIS, so bear with me as I answer your questions. The first one is yes, we are migrating customers from 4G to 5G, and we are seeing an uplift in terms of ARPU there, Piyush. What's happening is that there's the downward pressure on the rest of the base is pretty intense because competition is keen in the past two quarters or so. The biggest intensity is of course on the prepaid side, and there, as you know, we've got 33 million customers. Although we are migrating customers as fast as possible to the 5G, there's a greater downward pressure on the 4G side, particularly on prepaid.
Sorry, Piyush, can you repeat your question again on the fixed broadband?
I think second question is on percent of revenue from roaming. I think that's roughly about 3%.
Of the total mobile revenue?
Yeah.
Pre-COVID level would be between 2.5%-2.8% pre-COVID, depending on the quarters. I think as of this quarter, it's still below 1%. It's 0.something%.
Yeah. No,
Can you ask your question again, Piyush, on the fixed broadband?
I was asking fixed broadband ARPU saw some sequential improvement. What is driving that and the outlook of the broadband ARPU?
Yeah. What's driving that is, although we are expanding rapidly in terms of the customer base, but what we're also doing is also upselling our current base to higher speed plans, what we call upspeeding.
Got it. Thank you.
Yeah.
Next question from Mohseni, UBS.
Yeah. Hi, good morning, and thanks for the opportunity. Three questions from me. First is on the competition. Just want to understand, what are the key drivers of competition? Is the competition a reflection of weak macro? Or, and, just also want to understand that who is driving the competition, in the market? Second question is on your partnership with Microsoft. Just want to understand that how better you can deepen that partnership. Means can AIS, as part of the JV with Singtel and Gulf, be a provider of hyperscale data center for Microsoft? That's second question. A related question is, how much data center capacity you have, and what percentage of it is used for internal purposes?
Finally, any update on spectrum auction, the 3.5 GHz spectrum auction for this year? Thank you.
Yeah. I think on the competition driver, normally based on the economy, not good to have.
Not much money to spend. That is the main reason that why we have to reduce the cost. More important thing that, I think based on this period, as you know, they try to announce the merger together. When the merger news coming up, some group of the customer on DTAC or some True, they may would like to migrate. This is all the standard that I used to interview in the public that in the world where the merger happened, some of customer will walk away from the original operator. However, they try to maintain that kind of customer. That's why there are some special situation in this period try to protect all their customer. This is make a more fair competition.
Let me address the one on our partnership with Microsoft. Currently, we are actually in you know deep discussions with Microsoft in terms of how we can deepen and broaden the relationship. I would say that the relationship is going very well. We are working hand-in-hand on a number of ventures, which I won't be able to share right now. We are looking very much, of course, to widen and deepen that relationship.
Capacity. What we can share in terms of data centers, we have in total nine data centers that are serving both AIS operation as well as external customer. We don't share the exact capacity or the portion, but we will say that majority of the usage on current data center is for internal operation. Your last question, I believe, is on the auction, right?
Yes. On 3.5 gigahertz frequency.
I think for the auction, as you see the news, the new NBTC has already been in place. We believe that the auction of the leftover spectrum on 3.5 GHz will be the main task for this new NBTC. However, it may take a bit more time for NBTC. Based on what we see in the past, how NBTC works, we don't think that this year will be possible for the auction to happen. Maybe sometime during the first half of next year.
Understood. Thanks. This is very clear. Thank you very much.
Next question, Arthur from Citi. Arthur, can you unmute your microphone?
Hi, can you hear me?
Yes. Thank you.
Yeah. Yeah, hi, thanks for the opportunity. Several questions, please. Firstly with regard to competition, you mentioned things worsened a bit in April. Can you please elaborate on how this has developed in terms of volume and pricing? Second question I had is with regard to the recovery expected in terms of revenues. Are you able to share how the trends have been moving, month to month? Like, are things actually improving in March and April, once the market had actually reopened? Third question I had is with regard to the ARPUs. If you look at the 5G pricing, y ou mentioned around 15%, yet the postpaid ARPUs seem to continue to slide even with the rising adoption in 5G.
When I track it versus your competitor who doesn't really have a proper 5G offer, it seems to be just trending alongside. Why are we not seeing that uplift in overall ARPUs with 5G? Thank you.
Okay. Sorry, Arthur, can you repeat your first question about competition and volume and pricing? What was-
Yeah. Yeah, I just wanted to get a better understanding because you had mentioned that competition had started to revive again in April. How has that changed? Are you seeing it moving towards greater data bundles, or are you seeing price cuts happening in the market?
Yeah. What we are seeing actually is a combination of both, Arthur, particularly in the urban areas. A lot of this is due to the unlimited data plans with fixed speed, where, you know, our competitors used to put on these special promotions for a week or two. Right now, those special promotions seems to be ongoing all the time. The competition has gotten a lot keener there. It's particularly centers around unlimited data plans and fixed speed.
The pricing is going down on that side as well?
Sorry?
Is that right? The pricing for these unlimited programs is actually trending downward, is that correct?
Yes, they are. Yes, they are. Yes.
Understood.
Yeah. Your second question, Arthur?
If you can get a picture in terms of the monthly trends and revenues. I know that January and February have been impacted by Omicron lockdowns. Are you seeing improvements into March and April, for instance?
Yeah. Arthur, if I heard you correctly and you're not coming through clearly, is that what the trends are in the last three months in terms the competition remains just as keen, and we are not seeing an uptick in terms of, you know, or a slowdown in terms of the competition. What's happening is, as I mentioned before, that the 5G, we are experiencing a good uptick in terms of ARPU, but the overall pressure on the 4G side is still, you know, very great. We've got a large proportion of our customers on 4G.
Sorry. Maybe I wasn't clear. The line is bad. In terms of consumption levels, given that lockdowns have basically ended in March, are you seeing people spend more on telecom services towards March and April, or is there still pressure based on macro factors?
No. Essentially the spending, the level of spending is about the same. The macro factor is that, you know, there's, you know, the economy is still under stress and there's inflation.
Understood. The last question was on your postpaid ARPUs, because it's been trending downward even with much greater 5G adoption. Is it simply because we're seeing-
Yeah. Go ahead.
4G ARPUs going down far faster?
Yeah. We've got about 11 million postpaid customers, and just a proportion of that is on 5G. Again, you know, the proportion on 4G is much, much higher and therefore that's putting the stress on our ARPU.
Understood. Okay. Thank you very much.
Thank you.
Next question, Ranjan from JP Morgan.
Hi. Good morning, and thank you for the call. My first question is with what you have said in terms of competition and revenues not improving in March or April, even after the Omicron impact, what is going to drive up the wireless revenues for AIS and the industry? How do you get to your mid-single digit revenues target?
Yeah. I think the number one is, Ranjan, in terms of moving more customers onto 5G. You know, as you heard us just now, there are more mid-range 5G handsets coming online. As they come online, we essentially expect them to go on in greater numbers onto the 5G packs. That will help improve our ARPU in terms of that. Right now, essentially the challenge that we face is that, although we are successful in moving customers to 5G, the number of 5G customers in proportion to the number of 4G customers is still relatively small.
For the mass market, is 5G bringing any value to the customers? Why should they be migrating to 5G and paying 10%-15% higher cost when 4G services are getting cheaper and probably covers all their needs? I mean, what forces people to adopt 5G?
You know, essentially, then, you know, you've articulated that, yeah, that's the challenge that we face. In terms of 5G, of course, you know, there's higher speed. One of the things that we are going to be very focused on is of course, the lower latency of 5G. Of course, with our 5G packs, they also have a lot more data to use.
I understand the higher data allowance. It's just that, like, I don't know what people are doing with the higher speeds and lower latency, which they can't already do on 4G. Is there a reason for most people to migrate towards 5G right now? I can understand there'll be some high value customers which will choose to migrate. Can this become a mass market adoption?
Eventually it'll become a mass market option, Ranjan. There's no question about it. 5G is meant to be a mass market option. Right now, what we want to do is, as you know, in terms of any innovation, there's different segments of customers. One of the things is that we are going to, you know, be able to charge a premium to the early adopters. That's where these are the ones who are moving over to 5G first. Hence, I think, you know, what you're also asking is perhaps our migration is slower.
The reason that one of the things is that we don't want to rush that migration is to make sure that we are able to gain the extra part or the extra dollar from these early adopters.
Okay. My last question is that.
Ranjan, you are right. Ranjan, I am Somchai.
Yes.
You are right. Today, even 5G speed is better and also the latency is lower. However, the real consumer may not see the difference much. However, in reality, the 5G pack should be more beneficial than the 4G pack in terms of the gigabyte that they can spend based on the same amount of money that they pay. However, we are unlucky. Based on the market competition, there are some packages on the 4G, even fixed speed 10 Mbps unlimited that can make them more happy. This may be the major problem that we cannot lift up the 5G package that very, very beneficial to the customer.
I still hope one day all the operator, our competitor, True and DTAC, they are also realized one day when the situation like merger clear situation, all the operator should be considered in the unlimited 4G plan. If they can take it off, this all the thing will lift it up on the 5G package. Not only us that suffer, our competitor also suffer. You can see in the China market, if the three operator understand in the real situation why we invest in 5G, what is a 5G benefit to the customer, the industry will grow up. This is some certain period that is in the very fair competition that cannot make the 5G happen.
However, we don't give up this thing. As Khun Eng mentioned, we also try to differentiate our 5G benefit to the customer. This is the thing that our plan on the second half will have a lot of new things. Like, this year we also have the 360 broadcast for the Super Match on the Liverpool and Man U in Thailand to show if they use the 5G, they can have some experience on that thing. This is the some segmentation. However, in the mass market, in the total picture, all the operator in Thailand should be realized. If not, it's still stuck like this. You are right on the condition based on we have the 4G unlimited pack that destroy the market today.
Okay, thank you so much for that. Maybe one last question. I noticed that you have reduced your interest-bearing liabilities. Is that something that you'll look to continue doing going forward?
Sorry, Ranjan, can you repeat your question again? Interest-bearing liabilities.
Sure. I noticed you have reduced your interest-bearing liabilities. Is that something that you'll be doing going forward to manage your interest income, interest expenses?
Yes. I think it depend on the cycle. I think the last year and this year, I think the cycle is we kinda deleverage. Depending on the cash flow as well, I think we try to minimize the interest expense as much as possible. Yeah, but looking at the interest rate trend, I think maybe going forward it's gonna be on the upward trend. I think toward later part of this year we may try to kinda fix some of the long-term rate and try to borrow so that we can fix the cheaper rate at the moment.
Okay, thank you.
[Khun Prit] from Citigroup.
Hi. Hope the audio come out well. Okay. I have actually three questions. One quickly, first on COVID normalization, we all ask or seem to imply that the upside gonna be from reopening. May I check if there any kind of segment that you've gained during COVID that probably should normalize as well? For instance, like, people use online, like new sign-up for the online learning or people who upgrade their package because use of Zoom. Is there any kind of a risk that we get some probably leakage as we kind of only pricing in tourist return and reopening, but is there any pockets of any segment that you think we should kind of budget for any potential kind of normalization effect? Should I go through all the question first?
Yeah, Khun [Prit] we are watching that very carefully. So far, we don't see the effect that people are downgrading. For example, in terms of the fixed broadband side, the fiber broadband side, our sales are equally as strong as last year first quarter. We don't see people going back to their old behavior. We are watching that very carefully.
Thank you. I'm just curious because I noticed a lot of our low-end consumer, at least, people around me, like, the helper at home, they upgrade a lot of their package for their kids online learning. I'm not sure that's probably explain some of your earlier question about divergence between upgrade 5G, but remaining subs has been weakened. That's actually related to my second question about consumer budget in situation of rising cost of living. First of all, can you share with us the kind of any risk of downsizing budget for telco in the past? I understand that past high inflation was in early 2010s and probably 2008 back then. Back at the time, soft commodity price that Thai people are producing are still at least good.
This time around, the rising cost is purely fuel. I think all the rural income crops are not so great. Any sense of pressure that you feel right now or and you know because you see data on province level, is there anything that we should think about in terms of the risk that could offset the reopening, uplifting revenue momentum in the second half?
Okay. I think all the most concern that seems like everyone have is I think how do we grow the business and what kind of drive competition in the past few quarters. I think this is my personal view.
First of all, I think given the merger that, y ou know, trying to happen. The other two operators try to make sure that market share shift become very little, otherwise it may sway the deal. For the past, I think two quarters, actually there's a natural move of consumer to come to us given a better service and the unclear strategy on the other two operators. They need to protect so that, you know, the deal can go through. That's why you saw some of the low-end price pack in the market, try to make sure that people don't move. Also couple of that, couple on that is also the bad economic situation that we feel. Why we still keep the guidance is partly because two things.
The opening, like you mentioned, that's supposed to bring in, I think, more revenue or more income for the Thai people. Secondly, we believe that the low price pack in the market doesn't benefit anyone, right? After, you know, both the shareholders of the other operators already approved the deal, then hopefully everyone can come back to focus on building the business. That's what we try to target. Hopefully try to manage the low-end pricing, you know, slowly increase that in the market. Secondly, when you ask about whether we see or feel that the higher cost of living have any impact, to be honest, we do feel. Because our spending, as a portion of, you know, the total spending of the consumer is still really little.
I think the impact will be less severe than other services or other sectors. Hopefully, when we have the opening of the country, then you know the impact will be lessened because of the growing of the economy again.
Thank you. Actually, my last question is, sorry, it could sound very basic. But the way you explained is that the price pressure is because the merged entity seems to offer some package. But I thought that would be more like their retention package. Do you actually see your client base try to leverage that and kinda come back to you and say, "You know, those guys offered them this"? 'Cause I thought retention package should only lower the ARPU. But given that, you know, it's not as if they're pushing your client with that package, so the client kinda come to offer you. So on my read is that it is wrong, and actually it does spill over to your own client base too.
No, I don't think that's the big effect. The big effect is more on the low-end price plan that I think people are introducing to the market, especially in the first quarter. I think on the retention plan, everyone, you know, try to minimize, and that's on a smaller scale. It's not going out in a big way. The one that's really in the mainstream market is its low-end price plan.
Thank you very much. That's all my question. Thank you.
Khun Pisut.
Yes. Thank you again. I have just one follow-up question for Somchai, basically. On the merger deal between these two, I don't quite get why Advanced is going against the deal. What could be the benefit for both near term and long term for the shareholders from the scrap of the deal if you succeed to do that? Also, Advanced mentioned about the remedy from the NBTC if the merger can proceed. What kind of remedy? Is it a nominal remedy or what kind of remedy that you are looking for? Thank you.
As I mentioned in the beginning, the merger will go or not go, it depend on the regulator. However, as our position, we show our standpoint in the public, the meaning of the merger, how affect to the customer, how affect to the country. It is all the thing, let them understand the real legal, the real regulation something. However, if they can merge that, it also benefit us as our investor committee forecast. As a good corporate governance, we have to show our standpoint in the market. This is all the thing. When they can merge, we also ask for some benefit or some compensation, like I told you on the example of the frequency that we go to the auction.
Now we have some project with the NT. When NT teaming with AIS, maybe they need to transfer some frequency to us, something. By regulation today, we need to pay transfer fee. This is all the thing by regulation. However, if the merger can do, they have some combining frequency that no need to pay anything, that is not fair for us also. This is some example that we ask for the regulator, if they allow the merger happen, should compensate us in any way that we should get it.
Okay. Thank you very much.
Next question from John. Could you unmute yourself? Please kindly state your company name.
Hi. Hi, can you hear me? Yeah. Hi, I'm John from UBS. I just wanted to learn more about your [cross talk]
Sorry, John. Can you speak louder? It's quite soft.
Hi. Thank you. Hi. Is it better now?
Yes. Thank you.
Yeah.
Yes. Thank you.
Yeah. Hi, I'm John from UBS. I just wanted to understand more about your 5G strategy. So I see that currently you are mainly monetizing 5G through consumer side, through mobile. You're trying to make a migration towards from 4G to 5G to increase your ARPU. But I'm trying to get a better understanding. Do you intend to move this technology and monetize it over the enterprise segments? And how are you going to charge these enterprises? Are you gonna offer a full end-to-end maybe software as a solution services, or are you gonna charge by connectivity charges, like data traffic? And if this is the case, how do you see it complementing with fiber revenue, or do you think it will actually cannibalize it? Yeah. Thank you.
Okay. John, this is Goh Seow Eng. Actually, your assumption that we are only monetizing 5G on the consumer side is incorrect. We are actually monetizing 5G on the enterprise side too, especially in man- we have efforts and we have projects and actual customers in manufacturing, in transportation and logistics, in terms of ports, also all the way into smart farming and other industries. So it's not just the consumer side. On the corporate side or on the enterprise side, it's not just selling 5G alone. What we do that we layer on top are services like IoT, like cybersecurity, cloud, and things like that.
It's more like a end-to-end service, right? In that case you are charging on a project basis.
Yeah.
Okay. Thank you. That's been helpful.
That's right. Yeah.
The next Khun [Pratthana Leelapanang].
Hi. Just two questions from me. I'm not sure if I heard this right, but during the presentation you mentioned that there could be a downward revision to CapEx, your CapEx guidance. If so, what will be the condition that would trigger such a revision? And are we talking about a significant amount or a minor adjustment? That's my first question. The second question is for Khun Somchai. I believe you mentioned about the 700 MHz partnership with NT that's been approved by the board. And also, I believe Khun Somchai also mentioned that this partnership needs to be approved by the cabinet first. Is there a reason why the cabinet needs to be involved?
Because in the past, whenever NT does a deal with the private operators, they only need to get board approval and did not have to get government approval. Is this because NT needs to make some sort of a large lump sum payment to AIS, and that's why a cabinet approval is needed? If you can kind of shed light on that, would appreciate it. Thank you.
Your first question on the CapEx. We still guide the same range of the CapEx, THB 30 billion-THB 35 billion. What we mentioned earlier is that if we observe to see lower demand than we had expected, there is a scope that we could revise down, the overall, CapEx guidance. Not yet, revising down at this point.
On the 700 MHz of NT, why they have to go to the cabinet? Because this project, when they ask for the budget, even NT have their own money, own budget. They propose this project for the 5G before the auction, go to the NESDB, meaning the National Economic and Social Development Board to approve in the total picture. After they got the efficiency and try to plan to roll out the network, they face the problem on their budget. That's why they have to talk to AIS or another operator, try to do the network sharing project something.
When the project conclude, they have to back to NESDB and get the cabinet approved to protect themselves, because this is the total of project. Get a lot of money, but not in the one time. They have to pay based on implementation in 15 years on the license of frequency. These are the things that on the normal process of the big project for the state enterprise.
Okay, that's clear. Thank you very much.
Hi. No further questions at this point. Thank you everyone for joining our first quarter results conference call. See you next quarter. Any follow-up questions, feel free to contact our IR team. Good morning.