Good evening, everyone. Welcome to True's third quarter twenty twenty-four results publication. My name is Noreen. I'm the Head of Investor Relations. With me today are our CEO, Khun Manat, our Deputy CEO, Khun Sharad, and our co-CFO, Khun Nakul. Our presentation and additional materials are already available on our website, and it has also been emailed out to you. To ask questions in this session, please raise your hand, or you can also write it in the chat box. If neither of those work, you can please send me an email or a text, and we will take questions at the end of the presentation. I would now like to welcome, Khun Manat to start his presentation.
Thank you, Noreen. Good evening, and I'd like to thank everyone joining our Q3 2024 financial update. Today, we are pleased to share the key developments and progress as True Corporation continues to drive connectivity, digital growth, and sustainable value for all the stakeholders. Despite external challenges, we achieved seven consecutive quarters of EBITDA growth, reaching THB 25 billion in Q3. Our discipline focus on profitability result in a 30% QOQ rise in PAT, totaling THB 3.1 billion this quarter. Our effort to modernize the network have reached 64% completion, with 10.8K sites upgraded, strengthening our leadership in 5G. However, prolonged flooding has impacted economic recovery. Our commitment to operational excellence ensure we remain on track towards sustainable growth. Next slide, na krab.
Our accelerated network upgrade now covers 92% of Thailand with 5G. We modernized customer journey , improved user experience, and churn reduction. This solidify our position as the preferred 5G provider, serving 12.4 million 5G subscribers with fast, reliable connectivity nationwide. Our modernization efforts have significantly enhanced customer experience, with over 60% of users enjoying speed 2.5 times faster. We also achieved a notable improvement in the CSAT score, with 10.8K sites upgraded ahead of the schedule. We are all, well positioned to maintain uninterrupted service and seamless experience for our customers. Our growth extends beyond connectivity to strategic expansion into high-impact digital and cloud-based solution. AI-powered smart IoT. Our smart home ecosystem continued to grow along with online, achieving the number one most downloaded smart home app in the market, with 18% QOQ growth in app downloads.
We are meeting the evolving digital lifestyle needs of modern households. AI powers cybersecurity through our Security Operations Center , so-called SOC. We extend our service not only for large enterprise, but also provide affordable AI-driven cybersecurity solution for SME. This quarter, we achieved an 8.4% increase in SOC capacity and delivered 24% year-over-year revenue growth in cybersecurity, meeting the rising demand for mid-market protection. Our AI-first strategy and focus on ecosystem partnerships position us as a leader in Thailand's digital transformation journey. The recent flooding crisis challenged communities, but True's network team respond quickly to maintain the connectivity. Critical infrastructure was elevated, and water levels were monitored to prevent outage. Deployed generators, mobile Wi-Fi unit, and SMS alert in collaboration with the government, provided free 10 gigabyte data packages and extend bill payment deadline to affected customers to support them.
Our fundraising effort with The Mirror Foundation delivered essential relief supplies, and our employees joined cleaning mission to restore the flood-hit areas. Just as our team never gave up providing uninterrupted service under pressure, we encourage those affected by the crisis to stay strong. Together, we will rebuild and emerge stronger than ever . At the heart of our strategy is a commitment to the sustainability, social responsibility, and strong governance through the ESG initiative. We secure Thailand's largest sustainability-linked syndicated loan of JPY 141.3 billion, tied to reducing GHG emissions and expanding solar capacity. These initiatives support our goal of achieving carbon neutrality by 2030, and net zero emission by 2050.
For the fourth consecutive year, we were recognized by the National Innovation Board for the True Autistic application , which supports children with autism in developing communication skills. MorDee, a telemedicine platform providing easy healthcare access anytime and anywhere, to become the first company in Thailand to adopt the Responsible AI Roadmap , ensuring our AI solutions align with international standards from OECD, UNESCO, and GSMA. This positions us a leader in the ethical implementation of AI. This ESG initiative showcases our commitment to driving responsible and sustainable growth into every aspect of our operations. Thank you for the continued support. Now, I would like to hand over the presentation to Khun Nakul, who will walk you through the financial performance of this quarter. Khun Nakul.
Thank you so much, Khun Manat. Good afternoon, good evening, good morning, everybody from all over the world. Allow me to walk you through the financial performance. Starting with the highlights of Q3 2024. We have seen a service revenue growth of 4.2% on a year-on-year basis, which on a quarter-on-quarter basis is flat. The EBITDA growth, as Khun Manat mentioned, is a seventh consecutive quarter of growth, the seven quarters of amalgamation for the company, at a 16.5% growth on a year-on-year basis, and a 2.7% growth quarter on quarter. So even with the flat service revenue development, the EBITDA has grown 2.7% quarter on quarter.
The normalized profit this quarter is about THB 3.1 billion, which is a THB 0.7 billion growth on a quarter-on-quarter basis, largely coming on account of improvement in EBITDA. As a consequence of the efforts of the company, the leverage is down to 4.4x, which is net debt to EBITDA, which is a 1.2x decline on a year-on-year basis, and a quarter-on-quarter decline of 0.3x. Let me go into a little bit details to talk about the revenue development. First, the 4.2% growth in service revenue is mainly driven by mobile and online segments. This is on a year-on-year basis. The service revenue remained flat on a quarter-on-quarter basis due to lower contribution from mobile, offset by growth in the online business.
As you can see from the graph, the product sales have declined 17.4% due to optimization of subsidy. And you will see a much better picture because the cost has declined even more when we look at the cost development. The total revenue increased 1.4% on a year-on-year basis, which is driven by growth in service revenue across all business segments. Then I move on to the mobile segment. As you can see from the right to the left, the blended ARPU has improved for another quarter at about 1.6% QoQ, and a 5.6% on a year-on-year basis to THB 211.
At the same time, the postpaid ARPU has declined marginally by about 0.9% quarter on quarter, while the prepaid ARPU has increased 3.8% on a QOQ basis. The middle section of the graph, you can see, there is a 2.3% QOQ and 4% year-on-year decline in total subscribers, which is impacted by our focus on quality acquisitions, something that we have been reiterating for the last couple of quarters. And also, there is collaboration with law enforcement agencies on scam prevention. And as a consequence, the mobile service revenue has remained flat on a quarter-on-quarter basis, as I mentioned earlier, due to low contribution from postpaid, offset by the growth in the prepaid segment, which mainly came from the tourism. Then I move on to the online business, which is broadband.
We see a 7.5% growth on a year-on-year basis in online revenue, with 9.8% improvement in ARPU. So ARPU trend you've seen has improved on a quarter-on-quarter basis for the last many quarters. In this quarter as well, there is a THB 4 improvement in ARPU, and about 0.6% growth in subscribers as well. There is a 1.6% year-on-year decline in subscribers and about 9.8% year-on-year increase in ARPU, mainly driven by the removal of discounts and upselling of, customers to the high-value packages, which is primarily, as you can see, the outcome is on the ARPU, and as a consequence, you can see the online revenues have grown 1.5% QOQ, and 7.5% on a year-on-year basis.
Moving on to pay TV, there is a 0.9% year-on-year growth in pay TV revenues. The ARPU has slightly improved QOQ by about 0.8% at 283 THB. The subscribers have declined marginally, as you can see that, you know, there is a decline on account of the linear subscriptions. And as a consequence, you can see, even though there is a marginal decline in, the pay TV revenues on the subscription, the total revenues on a QOQ basis is more or less, flat or a negative 0.3%. Moving on to the OpEx, we see a 9.9% year-on-year, and a 3.4% QOQ decline in OpEx, which is benefited by the synergies and ongoing efficiency measures.
As you can see from the graph, the network cost declined 13.3% year-on-year, which is driven by continued synergy-related savings, as Khun Manat spoke about, from the network modernization. There have been procurement-related savings as well. The cost of sales have declined 21% year-on-year, in tandem with the product sales and optimization of subsidy. If you recall, the products, revenue declined 17%, and the cost has now declined 21.1%, which highlights the fact that we've optimized the subsidy, so profitability has improved. The SG&A has declined 17.7% year-on-year, again, benefited by synergies, mainly from organization modernization, commission and marketing expenses, and improved collections. We see record levels of lower bad debts for the company. The other cost of providing services decreased 0.3% year-on-year, declining QOQ, due to lower seasonal content and project-based costs.
Moving on to the EBITDA, we see a seventh consecutive quarter of EBITDA improvement, with 16.5% growth on a year-on-year basis. EBITDA has improved THB 0.6 billion QOQ, to close to THB 25 billion levels, an increase of 2.7% quarter-on-quarter. EBITDA improved by about THB 3.5 billion on a year-on-year basis as well, which is the 16.5% that I just mentioned a few seconds ago. Since amalgamation, we have seen a THB 5.5 billion improvement in our EBITDA, which is something that as management, we are very proud of. Then, as a consequence, the EBITDA to service revenue has improved to 60.2% in Q3 of 2024, the first time we have touched the 60% threshold.
Moving on to the profitability, we see a THB 3.1 billion normalized net profit in Q3, and we see a solid improvement in profitability in the nine months as well. The net profit in Q3, like the previous quarters, was negatively impacted by one-time effects of THB 3.9 billion, mainly pertaining to the impairment of redundant assets related to network modernization, and I think Khun Manat spoke about the number of sites that we've modernized already. The normalized profit, though, which actually amounted to about THB 6.3 billion for the nine months of 2024, has seen a significant increase as compared to the last year's nine months. During the same period, we see a CapEx in Q3 of 2024 of about THB 9.9 billion.
Majority of the CapEx is spent on modernizing the network, which you can see the results, on the OpEx and, of course, on the performance, here as well. On the left-hand side, you see the reported loss and the normalized profit on the graph. As you can see, from a THB 2.4 billion of normalized profit in Q2, we now report a THB 3.1 billion of profit, which is roughly a 700 million increase. Moving on to the leverage and the net debt position of the company. Again, in this quarter, we see a good reduction in the net debt, so now, on a full year basis, on a year-on-year, 37 billion of reduction in net debt, we can see in the graph here.
And then, as a consequence, the leverage, which is the net debt over the EBITDA, from a five point six turns in Q3 of 2023, has gone down to four point four turns in Q3 of 2024, a one point two x reduction. During the same period, or even actually in the last quarter, when I compare Q2 versus Q3, we've also seen a point three turn reduction in the net debt, which is coming both on account of interest-bearing debt, as well as, you know, the ones on the lease liabilities. The effective interest, as you can see from the graph, has more or less remained constant, from Q2 2024 to Q3 2024. The debt maturity profile you can see on the right-hand side of the graph.
We've issued debentures of roughly THB 18 billion at a weighted average interest rate of 3.8% in Q3 of 2024. There is also gonna be an upcoming debenture issuance in November 2024, to take care of the balance outstanding debt that is remaining to be that is supposed to mature in Q4. We've also secured a sustainability-linked JPY loan equivalent to roughly $900 million, which has been utilized to fully prepay the US dollar borrowing that we had. If you remember, we had repaid part in previous quarter, and then now we have actually repaid it in full. My last slide just giving you a nine months versus nine months comparison. You can see on the total revenues, improved 1.9% on a year-on-year basis for the nine months.
As far as service revenue is concerned, it's an improvement of about 5.3%. The total OpEx, excluding D&A, has reduced 8% on a year-on-year basis, and as a consequence, the EBITDA, on a reported basis, has improved 15.3%. At the same time, on a normalized basis, the EBITDA improvement is about 17.7%. The net profit after tax has improved about THB 10.5 billion in the nine months period in 2024 as compared to 2023, and as I mentioned earlier, we've seen a normalized profit of about THB 6.3 billion in the first nine months of this year. With this, I hand back to Khun Noreen. She will open up for the Q&A, please. Thank you.
Thank you, Khun Manat and Khun Nakul. We do have a bunch of questions already, but let me first start with... Before we do that, if you want to ask questions, please raise your hand, or you can also put it in the chat box, because some of you are still asking me how to ask questions. I'm just letting you know, you can raise your hand, or you can please type it in the chat box, or you can directly reach out to me. So with that, we start with Khun Pisut. If you can please, can we please turn on his camera and his mic? We can see you, Khun Pisut.
Thank you.
Hi, how are you?
Okay. Hi. Thanks for the opportunity, Noreen and management. Khun Pisut from Kasikorn Securities. I have three questions. My first question is on your mobile subscriber loss. It turned out to be the third consecutive quarters that you lost the mobile subscriber, and you mentioned earlier that it was about some technical adjustments, which was unlikely to persist. What exactly happened, as it does not look like the industry issue, as your competitors still reported positive impact? And what should I forecast this parameter in the future? My second question is regarding your guidance. You maintained two thousand twenty-four EBITDA growth guidance at 12%-14%, but mentioned that you could over-deliver the EBITDA growth over the guidance. How much should we expect your fourth quarter EBITDA growth from the third quarter?
For my last question, you are so successful in making the market believe about your earnings turnaround. The market is now shifting the doubt to how much your normalized profit can grow until hitting the normalized level, and when will it happen? It would be great if you can give us some color on this, and you can use your competitor's normalized profit level of THB 30 billion as the reference. Thank you.
Thank you, Khun Pisut. I would like to pass on all of that to Khun Nakul.
Sure. Thank you so much for your questions, Kun Pisut. Good to see you back at number one in terms of asking questions. With respect to the mobile subscriber loss, you mentioned third consecutive quarter. Yes. As we have mentioned in the past, however, except for, I think, Q1, where there was a technical adjustment on the subs, other than that, there is no technical adjustment in the last couple of quarters there. The reduction in the subscribers, firstly, on the prepaid, is purely on account of focusing on quality subscribers. As we have mentioned earlier, in this market, like many other markets in Asia, there is a high gross and a high churn kind of a behavior, and this is something that we've consciously wanted to address.
We saw our competitor do something similar, maybe sometime last year, and this is the time of the year. The Q1 and Q2 are now in Q3. We've taken measures to reduce the unnecessary growth rates that are there, because they do not add too much to the top line. Keeping in mind the commission that we spend, it is a negative profit for us. So hence, we have taken that as an opportunity to optimize our gross adds, which the effect of which you can see in the SG&A reduction as well, which is beneficial to the EBITDA. As far as the forecast is concerned, we believe that a majority of this exercise is already behind us. So we've taken three quarters to do this, this change. We've done it in prepaid.
We followed up in postpaid as well. We believe that majority of this is behind us, so the trend should turn around in the next quarter. Then your next question on the guidance. Yes, I mean, just give you some numbers. If you do not grow from the third quarter numbers, we maintained the THB 25 billion. We're already sitting at about 14.1% growth year on year on the EBITDA, which clearly means that we will surpass the guidance that we have given, to, to the capital markets, because the EBITDA range was about 12%-14%. We've had seven consecutive quarters of growth. We know that, Q4 is a seasonally high quarter. At the same time, there are seasonally high content costs as well.
We will continue to deliver on our efficiency and our synergy program, which also means that we should see a definitely better quarter as far as fourth quarter is concerned. The extent to which the EBITDA will be, I mean, I cannot tell you right now, but I can assure you that we look forward towards having a growth in our operations and the synergy realization and the EBITDA. On the earnings turnaround, if I understand your question well, we have had a normalized profit of in the nine months of about THB 6.3 billion. This quarter alone was about THB 3.1 billion.
If I understand your question correct, you are probably talking about even after considering any potential write-off due to network modernization, will we end up having a profit anytime soon? It is a bit... If I understand the question correct, right?
I think he is asking for reported profit.
Okay. So on a reported basis, of course, we need to factor in the effect that may come on account of the network modernization. We have, we are ahead of our plans. I mean, we wanted to do up to 10,000 sites of network modernization in 2024. Right now, we've done 10,800, so we are 700-800 higher than what we had planned. I think for Q4, you can probably estimate the network modernization to carry on with a similar momentum that we've seen in the first nine months of this year. So you can average it out, and we're gonna continue the plan. The network modernization, I'm sure there is gonna be a follow-up question.
We aim to complete the network modernization by Q3 of 2025, Nakul. Thank you.
Okay. Thank you. Next on the list is Piyush. If we can please unmute Piyush?
Yeah, hi. Good evening. Congratulations for the strong results. I have three questions, actually, if I may. In mobile, can you tell us what is leading to drop in postpaid ARPU sequentially? And if you can talk a little bit about the outlook of mobile ARPU. Secondly, you have already exceeded 2025 EBITDA margin expectations, which you had given during CMD last year. In light of that, can you talk a little bit about margin expectations for 2025 and CapEx outlook? And lastly, at what leverage level would you start considering, you know, dividends? Thank you.
Thank you so much, Piyush. Then I will pass that on to Nakul as well.
Okay. Thank you so much, Piyush. I hope you're doing well. Your first question on the ARPU decline in the mobile business, let me explain. It's basically coming on account of three reasons. Q3, we all know, is a seasonally low quarter, especially in terms of international roaming. In fact, in Q2, we had a good growth in international roaming, so when we compare on a quarter-on-quarter basis, we've seen a decline, which impacts the ARPU. The second thing is, as I mentioned, we are focusing on quality acquisition. Earlier, we had all spoken about prepaid. In this quarter, we shifted focus to postpaid as well, which is where you see our device sales have gone down on a Q-on-Q basis, but the subsidy spends are even lower on a year-on-year basis as well.
By focusing on quality acquisitions, we've seen a reduction in the handset bundle sales, which of course, impacts the revenue and also impacts the ARPU. But on an overall basis, these are more or less loss-making customers, so that's why we want to focus towards the profit-making business, as has been our strategy. There is one more reason. We also saw lower revenues in this quarter from EPL. You know, Q3 actually marks the beginning of, you know, a new quarter for EPL, and that's why the revenue is lower, which is expected to pick up in Q4. So these are the three reasons that I've seen that resulted in a decline in ARPU.
Also, please keep in mind, on a year-on-year basis, we've seen a THB 9 improvement in ARPU already, from THB 417 in Q3 of 2023 to THB 426 in Q3 of 2024. As far as forecast, I think you also asked about this. We believe the, you know, the growth in mobile business should probably be in line with the GDP, and, a large portion of this growth should be driven by our ARPU improvement. The second one, you had question on, on the EBITDA, right? We've exceeded the 2025 EBITDA margin expectations. Yes. I think we had a capital markets day on 26th September last year.
A lot of those KPIs that we mentioned at the capital markets day, including but not limited to the EBITDA margin, our net, net debt to EBITDA, we had a target of 4.5 by end of 2025. We are already at 4.4. So this calls for a revision in the numbers. We are in the midst of finalizing the strategy for the next three years, and very soon we'll come back with a revised set of numbers in a very, very short call to explain what the next two, three years are gonna look like. But as a management, we are not fully done with the synergy realization or our transformation program yet. As Khun Manat mentioned, we have done 10,800 site modernization. Target for us to do is 17,000.
There is some more way to go on the other, other aspects as well, so we should continue to see the improvement. The leverage, I think you asked about it as well, what level of leverage we would consider a dividend? As I've mentioned in the past, we do not link the leverage, or there is no minimum threshold for us to reach, as far as leverage is concerned, for us to consider the dividend. We expect to turn profitable on a reported basis as well in twenty twenty-five. There is no secret about it. And, as and when this happens, we'll obviously look at considering a dividend, which is gonna be brought to the board for approval.
We also know for a fact that our dividend policy is at least 50% of the standalone net profits, you know, keeping in mind the cash reserves of the company as well. So maybe sometime in the second half, we can look at a discussion on the dividend in 2025. Thank you.
Okay. Thank you, Piyush. Then we move on to Wasu. If you can please unmute and turn on your camera.
Hi, good morning, Khun Noreen and the management team.
Good evening. Sorry. So I have three questions. Number one is about the prepaid revenue, excluding the revenue from tourists. So how was the Q-on-Q trend for prepaid revenue for domestic customer? I'm just wondering whether the flood has impacted the prepaid revenue coming from domestic customers. So that's number one. Number two, now that True is ramping up network CapEx in the third and the fourth quarter, should we expect depreciation expense to rise Q-on-Q in the fourth quarter? And the final question, True's new debts, new debt issuances in the second and the third quarter seem to have interest, interest rate of around 3.8%. Why did the overall effective interest rate remain at 4.1% in the second and the third quarter, despite the lower rate coming in from the new debts?
Those are my questions.
Thank you so much, Khun Wasu. Nakul, if you would like to take that one.
Okay.
Prepaid revenue.
Okay. Thank you for your questions, Khun Wasu. Good evening. On the... Your first question is, excluding the impact of the tourists. Actually, I mean, let me explain the prepaid revenue development in this quarter. It's a mix of a few things. July, we saw the second highest tourist arrival in the country in twenty twenty-four, and in the last few years, in fact, if you ask me. So it was a very seasonally high month as far as the tourist revenue was concerned and tourist arrival was concerned.
At the same time, it was, we had an impact, you know, coming specifically in the month of September, especially in the north and the northeast regions, with respect to the flood, which definitely impacted the customers' affordability and of course, the mobility of the people as well. At the same time, the government also launched this subsidy scheme of about ten thousand, which was launched sometime in the tenth of September, if I'm not mistaken, which also had some positive benefit on the revenues as well. A mixture of all these factors have resulted in a growth in the prepaid business of about, you know, of the numbers that you see, what, 1.5% or so. Actually, that's what happened.
I cannot isolate the tourist here to see whether you know the rest of the business has shown a growth and what percentage of growth, but in a mix, this is what has happened in the mobile business, especially on the prepaid side this quarter. Then the next question on the network CapEx. Yes, Q3, we have done roughly THB 9.9 billion or almost THB 10 billion of CapEx. For nine months, we have reached about THB 20 billion. The CapEx guidance for the full year was about THB 30 billion, so you are right, there will be probably around another THB 10 billion that will be booked in Q4. As far as the D&A is concerned, it will be impacted by a couple of things.
Number one, as we continue to modernize our network, we will continue to see a reduction in the D&A because we do write-off of assets that are rendered redundant because of the modernization. At the same time, as we dismantle the sites and we reduce, you know, we end up not paying for the rentals for the sites, so amortization of rental also goes down. This obviously is offset with the fact that there is a higher depreciation, and that's why if you see in Q3, you know, the depreciation on a Q-on-Q basis was more or less flat.
It's a bit difficult to tell you what's gonna happen in Q4, but you know, you can assume that there is gonna be THB 10 billion of CapEx spent, and the roughly useful life of assets that we have is around 9 to 10 years. So maybe you can consider that to do the math. We've always believed that progressively, with the efforts that we do on the Single Grid, with the network modernization program, the write-offs and the rental reductions, the DNA should progressively go down ever so slightly on a quarter-on-quarter basis. Your last question on the debt issuance, the last couple of rounds have been around 3.8%, but the effective cost is still around 4.1%. I think we need to look at a couple of factors here.
One, the debt that we have refinanced since the last couple of quarters is relatively small as compared to the total interest-bearing debt of about THB 350 billion. So, you know, it has to be a significant portion of the debt to be refinanced at a lower percentage for the effective interest to go down. And, I think that probably will help me explain this aspect to you, Nakul. Thank you.
Thank you, Nakul. Next, we have Chris from DNB. If we can please unmute and turn on his camera.
... Hey, can you hear me?
Yes, we can.
Great. Yeah, so, so thanks for letting me on. So just another question on, on EBITDA. So you had stellar, I think, 4% sequential growth on average since Q1 2023. I'm just thinking, like into Q4, is it becoming more and more difficult to keep that kind of pace after fewer and fewer things to, to kind of improve on? Or is there no reason why you shouldn't be able to grow again at that kind of 4% plus or minus rate sequentially into Q4?
That's it.
On EBITDA.
Any other questions, Chris? We'd like to take all the questions first.
All right, sure. And then the follow-up on that is basically, if you look at that trajectory into Q4, and you kind of analyze that level that you have in Q4, and you also have that NT agreement ending in August next year, kind of, is there any reason why you shouldn't be in a position to grow EBITDA almost 10%, next year, I guess, with that tailwind from the NT agreement going out? Those are the two. Thanks.
Okay. Thank you. Nakul, would you like to take them?
Yeah. Yes, I can. Thank you, Noreen. Thanks, Chris, for the question. Yes, I've actually maintained it for the last few quarters, that it is increasingly becoming difficult to grow the EBITDA. You know, I think Q4 last year and Q1 this year, we saw roughly THB 900 million-THB 1 billion of growth in EBITDA. Now we see roughly THB 600 million of levels. So this should progressively go down, barring the impact that may come from the NT arrangement that you yourself alluded to. As we you know, mature on our network modernization program, as we mature in terms of finishing the synergies or, you know, finishing the transformation programs, the incremental effect is gonna be lower as compared to what we've had in the past.
Yeah, I mean, it will be difficult to assume a 4% growth on a quarter-on-quarter basis. That, I think is gonna be difficult for us to deliver. Of course, a large portion of this will also depend on how well we are able to grow the top line, because that can have a you know, two X impact on the EBITDA, keeping in mind a 55-60% margin that we have. Then, as far as next year is concerned, yes, if you annualize Q3, Q4, and if you consider the benefits that we may get from that the spectrum arrangement that is due to expire, the growth in EBITDA should be quite handsome next year.
We are not yet indicating our guidance for 2025, so you'll have to wait for Q4 numbers, and then we'll, you know, indicate to you the performance that is expected in 2025. But yeah, I mean, if you just consider what you just mentioned, then there should be a decent growth in EBITDA in 2025 as well. Thank you.
Thank you, Kunal. We have the last live question from Khun Jin, then we will move on to the chat box questions. Khun Jin, if you would please turn on your camera and your mic.
Sure. Can you hear me?
Yes, we can.
Somehow I cannot turn on the camera. I'm not sure why. I'm sorry.
That's okay, please.
Oh, okay.
Yeah, we can see you.
It's on. I have three questions. The first one, back to the Capital Days, which is, like, two years ago. Your guidance is that the big chunk of the synergy would come in 2025, whereas the integration cost would decline in 2025 compared to 2024. Is that guidance still whole? That's the first question. Second question, I wonder if you ever benchmark your margin against your competitor, Advanced, because if you look at the EBITDA margin between the two company, has been narrowed significantly in the past few quarters. Even your top line, it's larger than Advanced. Do you think in a three to four years time, your EBITDA margin could surpass their EBITDA margin, especially after the expiry of the spectrum? The third one is sort of a housekeeping.
If you look at your financial cost, it's sort of volatile, you know, THB 5.9 billion in the first quarter, going down to THB 5.6 billion, and then coming back up to THB 5.9 billion again in the third quarter. But then if you look at your debt, it keep declining. So I wonder what caused the fluctuation. Those are the three questions from me. Thank you.
Sounds good.
Okay. Thank you, Khun Jin.
Yeah.
Yeah.
I can take it. Yeah. Actually, on a lighter note, I just finished a board meeting sometime back, and you sound, you know, some of the things that you're mentioning is sounding very, very familiar now. As far as the Capital Markets Day is concerned, let me correct one thing now. Capital Markets Day was one year back, Khun Jin. Yes, it looks as if it was many, many years back, but Capital Markets Day was twenty-sixth of September 2023, and we are sitting in on twenty-fifth October 2024. It's good to know that you, you know, you get an impression that it was much back in future, in, in-
Back in the past.
Back in the past, because our performance that we are doing is much better than what we indicated at the CMD. We did mention that as far as 2024 is concerned, we surpassed the Capital Markets Day guidance on the net synergy numbers. So far, trends for 2025 indicate that we will surpass that guidance as well. Not 2025, 2024. 2023 we exceeded, 2024 looks like we're gonna surprise the guidance that we had given on the capital markets. Overall, I think the 250 billion THB of synergies that we had indicated, and as I mentioned earlier, most of the programs are running faster than what we had expected, barring a few, barring one or two.
On an overall basis, maybe we'll breach the THB 250 billion mark, maybe on account of two reasons: procurement savings, as I had mentioned earlier, especially in the CapEx, have been higher than what we had expected, and the second is because we have been able to realize synergies faster, that also improves the end net present value. Benchmarking with AIS, yes. I mean, this is, you know, one of the most hot topics of discussion in our company. We benchmark our performance with AIS on almost all parameters that we know. On a reported basis, you can see that there is we are higher in terms of top line, but if you normalize for accounting effects or accounting differences between us and our competitor, I think the top lines are more or less similar.
Of course, they are a hugely profitable company, and I give a lot of credit to the way they've managed their finances over the last few years. It is one of our ambitions to see how fast we can bridge that gap to AIS. But, I mean, if I look at it, their EBITDA margin to service revenue is close to 69-70%. We just reached 60%. So we have some way to go, and, you know, we definitely would like to keep in mind the threshold of those levels of profitability as we go forward. Very difficult to say how fast we can achieve that, because, I mean, it will require a lot of effort from the management team to see how we can deliver on those kind of numbers.
But to exceed that, I think that, you know, is gonna be one of the dream. Our first motive is to see how we can reach the same marginal levels of EBITDA, and hopefully, on the margin as well. On the finance cost, I'm not sure if I caught your question as well or not. I mean, if you look at the interest expense, the interest expense has gone down on a year-on-year basis, from about THB 5.1 billion in Q3 of 2023, to about THB 4.8 billion. It's kind of flat on a QOQ basis, and if you want, I can explain that as well, but the interest expense has actually gone down. The financial cost related to the licenses has also gone down by about 16%.
So, I mean, I'm not sure if I follow your question, but if you want, we can go into the details, and Khun Noreen can speak with you and understand where you're coming from, Nakul. Thank you.
Okay, thank you so much. We've kept some questions in the chat box waiting for a while, so let me move on to one of them. When will network modernization be completed, and should we expect more cost savings in 2025? I believe we've already partially answered this question, but Khun Sharad, if you would like to take it in more detail.
Yeah, sure. Thanks, Noreen.
Right.
As you heard from Khun Nakul just now about network modernization, that we are largely on track. You know, we have executed our plan ahead of the targets. We have modernized close to eight thousand three hundred sites in two thousand twenty-four, and cumulative number is ten thousand eight hundred. This plan is ahead of target, as illustrated already. And then, we plan to complete overall seventeen thousand sites as early as between Q3 and Q4 two thousand twenty-five. In terms of the cost saving, you know, cost savings are largely on track. What we are doing is, as also mentioned by Khun Nakul just before, that we are looking at all the KPIs which we have achieved so far and the one which are WIP.
We will indicate the cost-saving numbers also as a part of two thousand twenty-five guidance when we release the Q4 results. But of course, just to mention one more point, that we are a bit higher on the cost side. It's primarily because of the write-off amounts which are higher because we have dismantled higher number of sites, and the previously estimated cost was about THB 0.9 million, you know, per site, which is now close to THB 1.1-THB 1.2 million. And the higher cost per tower is primarily on account of the service element of towers that are being dismantled. But nevertheless, the more important point is that cost savings are in line with the target, Nakul. Thank you.
Okay. Thank you, Khun Sharad. We have another question from Osman: "The leverage is now below 2025 target of 4.5. What is your company's plan and capital allocation on dividends?" Khun Nakul, if you would like to repeat.
I think I covered it already, right?
Yeah.
Yes, we have exceeded the guidance by, I think, five quarters now. I mean, end of 2025, we expect it to be four point five. We're currently sitting at four point four levels. During this period, the net debt has, of course, reduced as well by about THB 37 billion since amalgamation. I think I already answered what our view is. I mean, we will continue to work towards improving the operational efficiency of the company, continue to realize the synergies, try to grow the EBITDA and, of course, grow the cash flows of the company as well. You know, the incremental effects obviously are gonna be smaller as we go forward.
As far as dividend is concerned, I already answered that. We aim to turn profitable on a reported basis in 2025. You know, there is gonna be a dividend discussion on the cards in the latter half of next year. Of course, it will be subject to board approval.
... Okay, thank you, Khun Nakul. Another question is from Khun Phatipak . As you have about THB 89 billion debt repayment in 2025, how do you plan to service this debt repayment, and are you going to repay it or roll over the debenture?
Yeah.
Okay, Khun Nakul?
Yes, I can take that as well. But let me just open the slide. Yes, 89.1. Correct. So, let me give you a bigger picture, Khun Phatipak . Over the course of the last nine months, we have refinanced close to 90 billion of our debt. You can just compare what we had announced on Q4 of 2023 as far as what needs to be refinanced in 2024 and 2025, and compare with where we are sitting in Q3 of 2024. So we refinanced roughly 90 billion, of which 47 billion pertain to 2024, and about 42 billion pertains to 2025. In this quarter, as I mentioned, we have voluntarily prepaid the entire US dollar loan of about $1.4 billion, which is about THB 50 billion Thai baht.
This was due to the Japanese yen borrowings that we had done and also internal accruals. Over the course of the last year, of course, we've managed to reduce the net debt as well as, as you've seen, thanks to the improvement in the cash flows. As far as future is concerned, as we have maintained, the Thai baht bond will continue to be the primary source of funding for us, with the next round of issuance expected in the month of November. Going back, what we demonstrated over the last nine months, we've refinanced roughly THB 90 billion of debt that was due in 2024 and 2025. We are confident that we can meet this THB 89.1 billion for next year as well, Nakul. Thank you.
Okay, I believe that's the end of chat box questions. Okay, I think we have one more. Izzati, can we unmute and turn on her camera?
Can you hear me?
Not very well. Can you-
Test again. Can you hear me?
Yes, we can. Yeah.
Yeah. My question is more on data center thematic that's been very strong in Southeast Asia, and I realize NVIDIA announced that they'll be investing in Thailand. I just want to get your thoughts on how does True think it will—I mean, does True see itself as a beneficiary of this investment? And if yes, maybe you can provide more color on the landscape when it comes to terrestrial fiber in Thailand, and from my understanding, True has ownership on subsea cables as well. Yeah, some color on that would be helpful.
Okay. Thanks, Izzati. I would like to pass that on to Khun Sharad.
Yeah, sure. You made a good comment. We have quite a strong presence in terms of data center. We have a sister company called True IDC, which are quite leading and dominant in Thailand. And what we are doing is that we are serving our customer experience through this data center. In the midst of it, we are also exploring, you know, hyperscaler partnerships, and of course, we will divulge more details as and when we are doing that. Thank you.
Thank you. One camera.
Yes, I just got another question. This is from Chris, from DNB. When you turn profitable at some point, some point in time next year, will the dividends coming be kept prudently within the scope of quarterly earnings? Yes, Khun Nakul, would you like to answer that?
That's a very specific question, Chris. What I can answer is that I can reiterate the dividend policy of the company, which is at least 50% of the net profits of the company on a standalone basis, which is the separate financial statements of our parent. Of the parent company of True Corporation. And any dividend discussion is going to be subject to the approval of the board, keeping in mind the cash flows of the company. I think I've already explained our position on the dividend in a previous question.
Just let's make this the last question. We are also aware of time. Question from Khun Supachai from Yuanta Securities . What is your view on upcoming auctions? What is your big picture strategy approaching this auction? And another question he has is: What would be a next move for True after delivering THB 20 billion synergy next year? So let me pass the spectrum-related question to Khun Sharad, please.
Sure-
Sorry.
Yeah.
It's okay. It's okay.
Okay. Thank you. So, True Corporation has, you know, every strategic intent to access and acquire spectrum frequencies to provide world-class network customer experiences. We are monitoring potential spectrum auction timelines and detail of spectrum roadmap, which of course will be provided by NBTC during due course. It is also important to note that True Corporation currently possess sufficient frequency spectrum bands, both in low, mid, as well as high range to service customers. We are having customer frequency bands are seven hundred megahertz, nine hundred, eighteen hundred, twenty-one hundred, as well as twenty-six hundred megahertz, as you know. We are focused on continuously developing on high-quality network.
At the same time, we will divulge our network strategy as soon as we hear about the NBTC auction plan, Nakul. Thank you.
The second part of that question, maybe, Khun Nakul, you want to take this one: What would be a next move for True after delivering the 20 billion synergy next year?
Okay.
Okay, Khun Nakul.
Next move after delivering synergies, of course, you know, we'll continue to run the business on a business as usual basis, trying to squeeze as much as we can, sweat the assets as much as we can, and improve the profitability. Is that? I don't know if I answered the question or not.
Also, the synergy realization plan is until 2026. We expect to be at steady state in 2026, so we do have another year to go with implementation.
Yeah. So we'll finish our synergy plan by end of 2025, so we'll get the full year benefit next year. But I'm sure, you know, there are other areas that we can work on improving the profitability of the business, yeah.
Okay. Thank you, Khun Supachai. I don't see any further questions. We are also pretty close to time. So thank you, everyone. Thank you for participating today. If you do have any follow-up questions, feel free to get in touch with me. We'll get back to you as soon as possible. Thank you, and have a good weekend.