Good afternoon, everyone. Welcome to True Corporation's earnings disclosure for the third quarter of 2026. My name is Naureen. I am the Head of Investor Relations. With me today, we have our Group CEO, Khun Sigve, and our CFO, Khun Nakul. We would also like to welcome all the analysts who have joined us in the room and to those of you who are online. For those of you who are online, please raise your hand. We will alternate questions between the room and online. We will start with the room first. I would now like to hand over to Khun Sigve to start his presentation.
Thank you, Naureen, and welcome to another quarter to those of you that came here in the room, but also to everyone that is following us online. Let me start with the key highlights of this third quarter. Q3 is our seventh consecutive quarter of profitability, and a big proportion of it is driven by sustained recovery in our top line. As we promised one year ago, when we presented our Q3 back then, we have since Q4 last year improved our top line every single quarter in 2026. Mobile revenue grew 3.1% year-on-year, excluding domestic roaming revenues. We added 1.8 million new subscribers. Growing is coming from a larger customer base and not only from market rationalization. When it comes to our online business, broadband business, revenue increased 1.1% from last year with 125,000 new subscribers.
This consistent growth in our performance translates then also into our commitment to a growing quarterly dividend, as we have guided the market on. This quarter, we therefore pay THB 0.16 for the quarter, which is 83% payout ratio. In summary, I will claim that our operating machine now starts to work after many years with getting those two companies together and taking out synergies. We are growing with discipline, building customer momentum, and making sure our strong performance also reaches and is distributed to our shareholders. We are on track for our financial performance commitment for the rest of this year as guided and also our midterm targets. Those targets will remain the same as we had told you from before. Last quarter, I introduced this slide with these charts, which clearly show the progress of what we have committed to you and to the capital markets.
Since the network outage in Q2 last year impacted our performance in the third quarter last year, we have steadily been rebuilding top-line momentum despite a challenging macroeconomic and operating environment in 2026. We have actually had some headwinds. This quarter, we deliver our highest service revenue since the amalgamation, which saw the growth both year-on-year and quarter-on-quarter. Our strategies in both the mobile business and the online business are now giving results. However, the B2B business and the pay TV business remain softer, and I am not happy with that. We are actively therefore addressing both areas. You should expect also those two business units to turn positive in the coming quarters. On the right-hand side of this slide, you can see a continued financial discipline. EBITDA reaches another all-time high since the amalgamation.
Despite reported a slight OpEx increase in this quarter, the operational costs directly linked to performance or the commercial part of the business remain firmly controlled. Our OpEx control are the result of structural efficiencies and our transformation agenda. This is then supporting both profitability and earnings quality. As I said before, our ambition going forward is to deliver a flat OpEx in the quarterly calls that you can measure us on in going into next year. We are moving from a synergy-driven performance towards growth driven by stronger execution and better customer outcomes. We call that our transformation program. As I said, there has been some headwinds during the quarter, and the operating environment remained challenging. Tourist arrivals were still below last year, although we saw the expected seasonal improvement from the second quarter. We are still below where we should be.
Private consumption continues to recover, but only gradually. We are not back to where we hope it should be. At the end of September, we had a severe flooding affecting 21 provinces, including Bangkok, and around 1 million households were impacted. Against this macroeconomic and also crisis backdrop, I am quite pleased that our performance continued to improve. I also want to send a thank you to our network team's ability to maintain network continuity throughout the floods. It is a little bit unfortunate, but I see now that the crisis management we have is really becoming trained because of all the crises we have been through. Mobile growth remained organic, supported by disciplined management of our customer base, better retention, and by that, increased customer consumption.
We also continue to manage costs dynamically, meaning adjusting costs to where we see the revenues are developing, allowing us to sustain the positive EBITDA development while preserving the investment needed to improve our services. The business continued to move forward despite this demanding external environment. This reflects stronger execution, more resilient operating model. Last quarter, I started to talk about AI, and I want to do that in this quarter as well. At True, we see AI as I call a business reinvention, not a technology program or a collection of several use cases. It is a complete change in the way we do the business. Today, I want to give you a quick update on where we are on the AI journey that we started last year and that we now start seeing some concrete results of.
AI is what I will call moving from experimentation into real execution across the business. Let me go through and give you some examples and some numbers to back that up. We have already now in a year upskilled 50% of our employees in AI fundamentals and developed also more than 130 advanced AI builders. We are moving quickly from pilots into everyday operation. 35% of all software development in True now is supported by AI coding agents, while in customer service, AI agents are doing work equivalent to around 135 full-time employees. On simplification, boring word, but still extremely important to change the way you operate. Since launching the program, simplification program in Q1, we have already rationalized, reduced 70% of our product portfolio.
Our ambition is to take this further, up to 90% reduction in our product portfolio, which gives us a much more simplified product portfolio and lower costs. In parallel, we are also redesigning our end-to-end business processes and business flows, and we are targeting 65% simplification of those processes as well. In B2B, one of our struggling business units, we started to reinvent the sales engines, and the pilot we have been running the last four months has already generated 60% more sales opportunities, improved win rate with our customers by 7.1 percentage points, and increased the contract value with 42%. Now, we are going to scale this in the entire B2B business, and we call that a domain approach, where we are looking at the entire domain rather than just individual business cases.
For me, this is where AI becomes interesting. It is not about the technology itself, but what we can actually deliver for our customers in simplification and in the business. Customer value management is another good example of this, and let me then show you some of what we have done in that area. One of our big moves on growth is our three years customer value management partnership project. We are partnering up with McKinsey's QuantumBlack on this. This partnership uses a gainshare model with limited additional investments and no fixed reward. Our partner is rewarded only when we create measurable value. At the center of our AI-powered personalization engine, it is using customer data, network data, and transaction data to define the next best action and offer for each customer across all channels.
We started with postpaid in Q2 last year and now expanded also into online and prepaid. So far, only in some relatively few quarters, these activities and this partnership have delivered THB 590 million in incremental value, THB 500 million in incremental value. So it is starting to be sizable. What we call beyond connectivity penetration, meaning services and products above selling data packages, is up 2.7 percentage points year -on -year, while postpaid churn is down 1.2 percentage points since Q1 2024. We are creating more value for our existing customers base, supporting higher ARPU, stronger retention, more selling of top-ups, and lower down sale, all done with automatic AI machines.
I am planning to give you a further deep dive on AI when we present our Q4 financials in three months, including also giving you some guiding on our financial ambitions that AI will create both when it comes to revenues and cost effects coming from AI. Experience, our big move on experience is where our investment over the past few years that I know are really paying off. To show some examples of that as well. In Opensignal's latest assessed, Opensignal being one of those companies that are testing networks, True and dtac emerged strongly, actually jointly earning the best network title in Thailand. I am underlining this because this is something we are super proud of. This is not we are used to over the last few years, to actually be scored as the best network title in Thailand.
This is coming from different categories. It is consistency in the category of download speed and also category time used on network. There were some categories that we were number two as well, but overall, Opensignal scored us as having now the best 5G network in Thailand. Customers are feeling the difference. A better network means fewer problems, and that also shows up in how customers are rating us. Our Net Promoter Score rose 48% year-on-year, 48%, with gains across every business segment. The Net Promoter Score comes from the network experience, but also from all other touchpoints that the customers have with us. That tells us that this is not only a one-off campaign, but a broad improvement in how customers experience True.
At the same time, we are making it easier for customers to help themselves. We are pushing a digital experience transformation, pushing customers from physical interaction into digital interaction. The main way we do that is through our True App. That's the main way customers can manage this service. Monthly active users on True App grew 24%, and app transaction increased 33%. When customers do a question to Mari, our AI assistant, in True App chat, the AI assistant is now able to resolve 98% of all conversation or all questions that the customers have. What we see with this, when customers then are starting to communicate with us digitally, of course, it's saving costs in the physical interaction, being shops or call center, but it's actually also improving the customer satisfaction. As more customer help themselves, the call center traffic fell 17% year-on-year. We are now fixing this, pain points by pain points.
With this, we see that customers are becoming more loyal, churn is coming down, and the same with the cost to serve. I'm then heading over to our CFO, Nakul.
Thank you, Khun Sigve. Good afternoon, good morning, good evening, everyone. Thank you. Let me walk you through the financial highlights for the third quarter of 2026. As far as the service revenue is concerned, it's a 2% growth on a year-on-year basis. This is normalized for the seasonal pay TV revenues, which I will explain in a few minutes. On a quarter-on-quarter basis, we registered a growth of 0.7%. As far as the EBITDA is concerned, there is a growth of 5.7% year-on-year, and also a steady growth of 0.6% quarter-on-quarter. On the reported profit, there is a 324% increase on a year-on-year basis, and also a 1.8% QoQ. We also see the leverage go down to 3.6x, which is a 0.5x turns improvement year-on-year, and 0.1x turn improvement quarter-on-quarter. Again, a steady decline over the last many quarters.
Last but not the least, as was mentioned, we're proud to announce a THB 5.5 billion of interim dividend, which is THB 0.16 , based on a payout ratio of 79% for YTD , third quarter of 2026. If I go onto the overall revenues, as you can see on the screen, there is a 2% improvement in service revenue, which is backed by continued quarter-on-quarter growth amidst the macroeconomic headwinds. The 2% growth in revenues on a year-on-year you see on the slide is basically normalized for the seasonal pay TV revenue, basically on the concerts, and I will explain the TV business in a bit. The growth is basically driven by growth in mobile and online segments, which is very visible from the middle graph that you see on the screen. From a THB 41.3 billion in Q3 of 2025 to a THB 41.6 billion, which is a THB 300 million increase.
The mobile business has actually grown THB 1 billion on a year-on-year basis, which is roughly 3%. Of course, there is a slight decline in the NT roaming revenues, which we expected as we were going forward. But the big increase is the increase in the mobile business, which is growing roughly 3% on a year-on-year. You see online business has also registered a growth of 0.1%, but the devil is in the detail, wherein the B2C online has improved, and there is a decline in B2B, which I will explain in a few minutes. Pay TV, as you can see on the screen, is actually a decline of THB 600 million, which is coming on account of two factors. One is a decline in the seasonal concert revenues, and two is the organic decline in the linear TV business.
Hence, we report a THB 41.6 billion of revenues. As far as the total revenues is concerned, the product sales increased 13.7% year-on-year, as well as 17.1% QoQ, due to seasonality, of course. It's the season of the Apple phone launch. The total revenue has declined 0.8% year-on-year due to lower network equipment rental revenues. As you're all aware, this is on the expiry of the network arrangement with NT, which happened in August of 2025. If I go into the mobile business, we registered a growth of 3%, but let me break this growth down for you.
As far as the subscriber addition, which is what you see on the middle part of your slide, is we have 142,000 increase in subscribers quarter-on-quarter, and approximately a 1.8 million increase on a year-on-year basis, which is a healthy 0.3% and 3.9% QoQ and year-on-year respectively. As far as the ARPU is concerned, prepaid ARPU has improved THB 4, both on a quarter-on-quarter as well as on a year-on-year basis. That's due to higher consumption. Postpaid ARPU this time, based on special request, we have actually normalized the change in ARPU, excluding the impact that is there from the Ministry of Education SIMs that we told you we're selling at a THB 45.
If you normalize that, then there is it's actually relatively stable ARPU on a year-on-year basis from THB 421 in Q3 of 2025 to THB 420 in Q3 of 2026. The THB 1 decline that you see is basically on account of B2B, while B2C has actually shown a good increase. As a consequence, the blended ARPU is actually showing a THB 3 increase on a quarter-on-quarter, as well as THB 1 increase on a year-on-year basis, again, normalized for Ministry of Education SIMs. As a consequence, you see there is a 2.8% growth in revenues year-on-year and a 0.8% growth quarter-on-quarter. Move on to the online business, and let me first talk about the right-hand side of the slide. Both in terms of ARPU as well as subscribers, there is a healthy growth.
You see the growth in ARPU is about THB 10 year-on-year and THB 4 on a quarter-on-quarter basis. This is basically the B2C online subscriber growth. As I had mentioned, this is coming on account of the back on the back of the MyPlan that we introduced in the beginning of this year, and also making sure that the customers who are coming out of the discount cycle are not given those discounted packages anymore. At the same time, we also report a healthy addition of subscribers of about 30,000 on a quarter-on-quarter basis and 125,000 year-on-year. It is because this that the mobile, sorry, that the online B2C business is registering a 5.8% growth, while the online B2B business is registering a decline of 12.1%. As a consequence, the overall is showing a 1.1% increase.
The decline online B2B is basically on account of the government projects, which are actually USO project Universal Service Obligation that have actually expired in Q2 of 2026, and that's why there is a decline on a year-on-year basis. We expect part of this revenues to catch up in Q4 and fully next year as well. Let me talk about the TV business. As you can see from the graph, the TV business is broken into subscription revenues, concert revenues, which are seasonal in nature, and others. The subscription revenues is showing a marginal decline, which is as expected, because we know that the linear TV is actually de-growing about 4% on a quarter-on-quarter basis in terms of subs, which is very consistent that you've seen in the previous quarters.
If you see the concert revenues, there were THB 600 million in Q3 of 2025, and now they are THB 200 million in Q3 of 2026. The reason for the decline is lower number of tourists in the country. That's why, because these revenues are linked to the tourists and are seasonal in nature, we normalize it to show the real growth to you. Why this is also important is because if the mobile business B2C is growing 3% year-on-year, and the broadband business is actually growing 5.8%, that contributes more than 85% of our total revenues. On the ARPU front, as far as TV is concerned, it is relatively flat with slight growth, which has come on account of the subscription revenues.
As far as OpEx is concerned, there is a 9.5% year-on-year decline, which is benefited by acquisitions of spectrum and also operational excellence across the board. The regulatory cost has increased 10.4% year-on-year due to change in the full year effective rate of spectrum. I think this is the consistent message or the consistent expression that we have given to you over the last three quarters. As far as network costing concern, it's declined 10.7% year-on-year, which is benefited by acquisition of spectrum and also the network modernization program. The marginal increase QoQ is due to the retrospective adjustment in Q2 from vendor negotiations that we had highlighted in the past.
The cost of sales have increased 10.5% year-on-year and 18.4% in tandem with the product sales because of the iPhone launch, but there is an ongoing improvement in the margin, as you can see from the numbers very clearly. SG&A has increased 0.9% year-on-year due to higher consultancy fees, while decreasing 3.4% due to improvement in bad debts as well as lower marketing spends. The elimination of spectrum rental costs due to expiration of the spectrum arrangement with NT, has actually resulted in a THB 1.9 billion decline on a year-on-year basis. Last but not the least, the cost of providing services has decreased 0.5% QoQ, overall resulting in a 9.5% decline year-on-year.
As far as EBITDA is concerned, there is a 5.7% year-on-year improvement in EBITDA, which reports at THB 28.5 billion, which is also a 0.6% improvement quarter-on-quarter. The EBITDA margin to service revenue is about 68.4%, just slightly a shade below what we had in the previous quarter, but still amongst the highest that we've reported over the last many years. As far as the EBITDA improvement since amalgamation, it is roughly THB 9 billion or 46% growth since amalgamation, I would like to highlight. As far as net profit is concerned, net profit for Q3 increased 1.6% QoQ to about THB 6.7 billion. The Q3 profit was impacted by one-time effects of about THB 0.3 billion, which is coming on account of two effects. I know this question will come, so let me explain.
One is coming on account of network modernization that is happening on the online business, which is roughly half of this THB 1.3 billion. The other is the rest of the half, which is coming on account of the Single RAN, which is the network modernization on the mobile side. The finance cost has decreased almost 2% year-on-year and 3% QoQ, which is basically led by 0.5 percentage points year-on-year and 0.2 percentage points quarter-on-quarter improvement in the effective interest cost because of our effective debt management. The depreciation and amortization marginally decreased 0.4% year-on-year and increased 1.9% from seasonality. By seasonality, I mean one extra day, which is basically resulting in the increase. As far as CapEx is concerned, we report THB 8.1 billion of CapEx in Q3 at a CapEx to sales of about 17%.
But as you know, the CapEx in the first half of this year was actually relatively low. So if I look at the CapEx to sales for the nine months, we are roughly about 12%, and we stick to the CapEx guidance for the year of about THB 25 billion-THB 27 billion. Worthwhile to note that 55% of the CapEx that we spent is basically on the mobile business. Roughly 30% is on the online, including B2B, and 15% is on IT and others. As far as the leverage is concerned, happy to report there is both a reduction in the net debt from THB 426 billion in Q3 of 2025 to THB 408 billion in Q3 of 2026, with the leverage being 3.6x, which is a 0.5x reduction on a year-on-year basis.
The effective interest rate on the debt has actually gone down 0.2 percentage points quarter-on-quarter and 0.5 percentage points on a year-on-year basis. That is basically on account of a host of the measures that we have taken, mainly actually coming on account of early prepayment of bank borrowings as well as the early call of debentures, which is roughly THB 33 billion of what we have done for the last nine months, and that has resulted in the reduction in cost. We have also issued new debentures of roughly about THB 8 billion at a weighted average cost of 2.67%, which is slightly higher than what we did in August of 2.61%. But if I normalize for the tenor for these bonds, this is actually the lowest as well. As far as dividend is concerned, as I mentioned, it is THB 0.16 for the Q3 2026.
But if I look at the payout ratio, though it seems 83% for the Q3, it is 79% for the YTD of 2026. We still reiterate an 80% dividend payout ratio as we go forward as well. So THB 5.5 billion of interim dividend, which is having a record date of 16th of November and a payout date of 1st of December. My last slide, basically the nine months 2026 versus nine months 2025. It is a 0.3% improvement in the revenues, but if I normalize for the seasonal decline in the concert revenues, it is a 1.1% increase for nine months on service revenues year-on-year. The OpEx is down 23.6%. The EBITDA is almost touching 10% increase on a year-on-year basis. As far as the net profit is concerned, it is a THB 7.1 billion increase year-on-year.
With this, I would like to end my presentation with one note. We report Q3 as the highest service revenue ever, as the highest EBITDA ever, as the highest net profit ever, as the highest dividend ever. But there is only one item which is the lowest ever, and that is the leverage. I hand over to Naureen now. Go, Naureen.
Thank God you did not say share price. Okay, so we can open up for questions. There is nothing online, so maybe we start with the room first. Khun Pisut, can we have a mic, please? Yes. For those of you online, please raise your hand and just give us a minute. After we finish this, we will come back to you.
Yes, thank you, Khun Pisut from Kasikorn Securities. I have two questions. The first thing is, this is 2026, it is already end of it, I think. Let us talk about 2027. We are going to have something like a spectrum that you bid for 1500 MHz. It would be great if you can update us about how you are going to make use of it, turn it into the revenue, and also the competitive advantage against your competitors. Also, the 2100 MHz that are going to expire in November, December next year, what is your plan of it? The chaos at the NBTC, do you think there is any risks that the spectrum auction may not delay from the timeline that it should be? Also the 3500 MHz that your competitors is looking for, that is on the spectrum side.
Also on the digital TV, that your license is going to expire as well, and what your plan for the digital TV? Lastly, on the direct-to-device, you are talking about the AI, which is a new thing, but the latest thing in the market, not just in Thailand, but also the global telecommunication, is about the direct-to-device, especially for the Starlink or SpaceX. What is your plan on it? Yes.
Okay. I can try to answer those questions. Let me start with the 1500 MHz spectrum. This is a spectrum that I think people were surprised that we actually bought in the spectrum auction in July last year. We did it because we see this being a valuable spectrum going forward. A valuable spectrum meaning that it will be valuable in the more rural part of Thailand, where you can use it for coverage. We plan to start rolling that out within next year. We plan to use it, as I said, as a coverage brand, but we also plan to use it as a fixed wireless access for our broadband customers. We see that with the plenty of spectrum portfolio we now have, we do not have to cover all the households with the physical fiber. We can actually do it with fixed wireless solution.
That is the plan on that. On the 2.1 GHz, I think it is zero risk that we will not have that auction. We have seen that in the past as well, when the spectrum was running out, then the regulator made sure that you got an extension until the auction actually had happened. I do not think any regulator will risk customer interference of this. So I am not zero worried about that one. On the 3.5 GHz, well, let us see when it comes. First, NBTC need to start meeting again, and then considering this issue. We have argued that there is more than 300 MHz available in the 3.5 GHz band. NBTC should therefore award more than 100 MHz. They should award at least 200 MHz, because if so, both ourself and our competitor can get our fair share of that. So that is what we will be looking at.
We have a super spectrum portfolio as of now, so we do not really desperately need that 3500 MHz. But of course, if the commercials are right, if the reserve price is right, and the spectrum available is usable, we will be looking into it. On your second question, the satellite direct-to-device. On this one, first of all, Thailand, as you know, is regulated in this space. They are regulated in a couple of areas. First, you need a landing license, and currently it is only the government itself, NT, that have that, and Thaicom. Secondly, that landing license need to be majority owned by Thais, Thai ownership, as it is in the telecom sector. That is what I think the regulator have told all the foreign players going forward. Starlink have decided to not partnering up with anyone. They want to have 100% control themselves.
Until this regulation is changed, which I do not think it will for the foreseeable future, their business model will not work. Amazon, the LEO satellite for Amazon, have a different strategy. They actually want to partner up with someone. As announced before, we are now in dialogue with Amazon on partnering up with them to provide services in Thailand. Having said that, we also need to look at the business opportunities in a country like Thailand. Remember that the 4G and 5G coverage in Thailand is probably more than 98% or 99%. Meaning almost 100% of the Thai population already have a data connectivity. There is almost zero chance for a satellite player to really be disruptive, because to be disruptive with that, you need to offer cheaper and better services.
Satellite services, both on capacity but also in price, will not be able to compete with the offerings that we have. There is no kind of coverage gap here that those guys can play with. But of course, when it comes to emergency services, it will be useful for us as a mobile company to team up with them. But also when it comes to potential satellite services to the homes, because now we have around 50% penetration on online, but there is another 10 million- 13 million households that do not have an online subscription. How many of those that should be served by fiber and how many of those that should have different types of access technologies, I do not know. But about the 1500 MHz spectrum that I talked about, but maybe also satellite services could be for a more remote part of those households.
We see that satellite services are complementary to what we do, and that is why we want to partner up with Amazon. We do not see this as a real competitor to neither the traditional online business nor the mobile business.
Thank you, Khun Pisut. Thank you, Khun Sigve. Let me move online. Arthur, will you please unmute and turn on your video?
Hi, good afternoon. Thanks for the opportunity. Just two questions from me, please.
Sorry, Arthur.
First thing on the enterprise side, I know that it has been quite soft. I am just wondering what can be done to revive this, and how soon can we actually see the benefits of this? Second question I had is with regard to the mobile business. I do note that the flooding has been very widespread. I am just wondering what your expectations are in terms of consumption impact into the fourth quarter, as presumably some of the people end up losing their budgets for repairs. I am just wondering if you are already starting to see any softness into 4Q. Thank you.
Arthur, may I just ask you to repeat your first question? We could not hear you.
Oh, sorry. My first question was with regard to the enterprise segment, which has seen some softness in the quarter. I am just wondering what can be done to revive this business and grow this over the longer term? When can we see this as materializing?
Yeah, maybe let me address that. The enterprise business, which is both enterprises, of course, but it is also SMEs. I think both ourself and our competitors is saying exactly the same, and that we need to get out of only competing on price for basic data services. You know, that is what we do today. It is actually, it is just a price competition where many of these enterprises go through tenders to get the cheapest price. So both of us are trying to get out of that, and then getting into more advanced services. I think both of us are partly building up some of those beyond connectivity, as we call it, or IT-related services ourself, but they are also doing that in partnership. So that is a strategy for both of us.
Some of those services can be bundled services, where we basically are taking partner services, bundle that in our customer offers, and leveraging our brand and distribution system. Some of it we can do ourself. So there could be cloud services, it could be going forward, it could be AI, selling AI token as a service, it could be security services, and it can be other type of platform services. Today, as I have said before, I think both ourself and our competitor is having only 8% of our total revenues coming from the B2B side, whereby, if I benchmark that this region, this should be between 15% and 20% of the revenues. That is where we are targeting it also.
The red figures we have seen on the B2B growth this year, I expect to turn green going into next year as a result of the efforts that I am talking about. This has been a bigger transformation journey than it has been on the pre and the postpaid, and also online. The main reason for that is a need to upgrade skills, but also to find these partnerships. Going into next year, I expect this business to also be growing, and then over time, being a much more sizable part of our overall revenues. Then to your second question, I think relatively little impact of the flood that we have seen going into the fourth quarter. We had impact in the third quarter. It was 1 million households that were affected, and of course lost their connectivity. We gave some compensation to those households.
All that, of course, is in the Q3 numbers. But in Q4, cross fingers, if we do not have another major flood incident, I do not foresee any effect of that going into Q4. Then, yeah, GDP. I do not know. I do not know how much affected we have been by the GDP slow coming back so far. We are mostly affected by the tourist segment, the migrant segment, not so much about the affordability with the customers. Having said that, Q3 historically has always been our weakest quarter. That was last year, and the year before, and the year before. This year, as our eminent CFO just concluded with, this time it was different, because Q3, this one was the highest revenue and profitability quarter we ever had.
Piggybacking on that going into fourth quarter, which also historically is always much better due to festive seasons and all that, I am quite confident that, and you will probably ask me that question also, can you deliver on your full year forecast on revenue, 0% - 1%? That is what we are targeting, which means if you do the maths, that the fourth quarter need to be quite significantly better than Q3.
Just, if I may just add one thing here on the USO, Arthur. While you see a decline on a year-on-year basis in the online revenues of 12.1%, that is primarily on account of the USO revenues that are not there. This is basically the government project which builds connectivity in the rural area, especially using Wi-Fi. Part of this revenue is actually one back, and you will see it in Q4, and the other projects are work in progress as well. This decline is basically on account of that, and the growth picture, Khun Sigve has already explained to you. Also, the guidance is 1% - 2%, and we stand by it on the revenues. Thank you.
Very clear. Thank you.
Okay. Thank you. We move on to Khun Jin.
Hi. Thank you. I have two questions, one short-term, one really long-term. For the short-term questions, Your mobile phone net add remained positive in the third quarter, but the number declined from the first and second quarter. May I know what caused the decline in net adds, and would it suggest a decelerating growth in mobile phone revenue going forward? Second quarter, I'd like to go back to Khun Pisut's questions about the threat of Starlink. I know there's still a big gap between Starlink price and the mobile phone and the fixed broadband price at the current moment. There's a lot of talk about Starlink improving speed and improving capacity once they launch the next-gen satellite, the so-called V3, into the space in the next 5-10 years.
Nobody tell me what would be the price after they complete the launch of the V3. If you look forward into the future, maybe in the next 5-10 years, do you think that they could any chance become a threat to the mobile phone if they can improve the speed and bring down the price? Thank you.
Let me take the Starlink, and then you can take mobile. Maybe I sound a little bit too confident here, but I am not frightened by Starlink because of three things. One, they need a landing license, and I cannot say for the entire future, but at least in the medium-term future, I do not think Thailand government or the regulator is going to allow a foreigner to operate 100% satellite services in Thailand. They will have to have a partnership. That is against their model. Even if they got the partnership, then that partnership would make sure that the mobile business were not disrupted. That is one. Two, I cannot predict 20 years from now or 10 years from now how fast that speed can be or how cheap it can be.
I think that is quite a common wisdom that for a satellite service to compete with a fully developed mobile service where the CapEx is already being applied, you already have rolled out your physical infrastructure, you are working in a market where an ARPU is THB 300 or less than THB 300, I think it is super difficult to foresee that they will be able to offer similar services to a similar price. Three, even if they do all that, it does not work indoors. The market where people are really dependent on indoor coverage, being in a shopping mall and in your house, the satellite services do not work because you need to have the site to connect to satellite. That is why I think that satellite services are complementary. Yes, they will come, but being a complementary to the mobile network.
In other markets where the penetration is much less, can be big market, Australia, for example, a big, big country, then it is a different issue. In other markets where the mobile ARPU is much, much higher and the networks are not as built out as in Thailand, there could be another issue. In markets where we allow Starlink or foreign players to own 100%, that is another issue. But in Thailand, I do not see this affecting us.
Yes. Let me take the first one from you, Khun Jin. This is on the net adds that were quite high in previous quarter and low on this one. Last quarter, we had 478,000 net adds, of which 400,000 were prepaid. If you recall, there were two reasons why the net adds in prepaid were too high. Both were actually regulatory reasons. Number one was, this was a new NBTC rule to charge THB 3 from the customers who had active amount in their balance, but were not active users. Even if the customer had come up for an expiration of the bill service, we could deduct THB 3 and keep them active for another 30 days. That is the reason why those subscriber were counted as active, even though the ARPU was THB 3. That is why the ARPU also showed a decline in the previous quarter.
The second reason was Thai Help Thai program. Being a Thai, you are aware that this was a program that was launched to put money into the wallets of the customers. If the customers wanted money in their wallet, it was linked to their mobile subscription. That is why we saw a few customers who were actually keeping their SIM as active just to be reported as subscribers. Even after eliminating that, there were some additions in the net adds in the previous quarter, and we continue with a similar momentum in Q3 as well. 142,000 in Q3 is pretty similar to the range that we had in the previous quarter, both in terms of prepaid as well as in terms of postpaid as well.
Also in prepaid, because the tourists are higher in this quarter, I would say half of the net adds in Q3 is basically from the tourist as well. I hope this answers your question. Thank you.
Thank you, Khun Jin. Can I move on to Piyush? Can you unmute, please, Piyush?
Hi. Thanks a lot.
Are we seeing your voice signal, Piyush, now?
No, no.
Can you hear me?
It was switching between another person.
Okay. No, no, we can hear you. I was just kidding.
Yeah. Okay.
Please go ahead.
Yeah. Congrats for the results. Two questions. Firstly, on the postpaid side, we saw the ARPU is stable year-on-year, excluding the impact of MOE SIMs. But can you talk about the outlook for postpaid ARPU? How much of headroom existing packs have on data allowance, or is there a possibility that customers move to higher packs as they use up their data allowance? Secondly, on B2B online, can you quantify what was the impact of that USO project in Q3, or how much can we see a recovery in fourth quarter? Thank you.
I can take the postpaid. We are improving the ARPU, and the main reason for that, I will say, is that we are able to use that program, as I talked about, the partnership we have with McKinsey, to do upsell. However, there is a regulation in place, and the regulation says that you are not allowed to move a customer that have a promotion that expires into a different package without a consent. This is something we need to change. This something that came also out of the amalgamation, because now we are giving our postpaid customers on average 21% more data year -over -year. We are actually selling 21% more goods, but we are not able to slightly increase the prices for that.
I hope that we will be able to do something with this, and this is something that we want to talk loudly about, because this market need to allow us to price our products fairly. On top of that, of course, we are working on some of the beyond connectivity ambitions, being security and some other things. We are also now trying to be better at bundling in content, and The Voice campaign that is currently running, but also the AF, Academy Fantasia, that we had some few months ago, are examples of that. We were trying to upsell that to our customers. I do not want to give you any concrete target or number on this, but of course, going forward, we would like to increase the ARPU for our postpaid customers. So far, we have not seen any affordability issues.
We are not seeing that customers are selling down on their packages or migrating from post to prepaid. We think that with the data quality we have in our network now, back to what I said, that we actually got the scoring from Opensignal, I think the postpaid customers are willing to pay for what they get, but we need to be able to do that.
Thank you, Khun Sigve. To your question on this impact of USO, Q3 2026 versus Q3 2025 is approximately THB 200 -something million, Piyush . That is actually the decline, and that is why if you were to normalize for that, the decline would be pretty much negligible. How much of this is expected to be won back in Q4? I would say approximately half of this is going to be won back in Q4. Then, of course, there is going to be further momentum, because the way these projects are run, first, this project is going to be not a revenue recognition for the full quarter, but for part of the quarter, so that is why the amount is low. The second is they have more upfront revenues, and the recurring revenues are over a period of six years. That is how these projects are run.
Allow us to share the fourth quarter results, and we'll explain a little bit more. I hope this much information is useful for you. Thank you.
Got you. Thanks. Thanks a lot.
Thank you, Piyush. Can we call on Ranjan? Are you still there? Hi. Can you unmute?
Hi. Yes, hi. Good afternoon. Thank you for the presentation. I just have one question. The decline in financing cost, can you help us understand how much is that driven by changes in the average tenure of loans, and how much is you basically benefiting from decreasing leverage? The extrapolation of all of that would be like, how should we think about refinancing costs could trend in the next one or two years? Thank you.
Yeah, I can take that. Thanks for the question, Ranjan. I think the reduction in the effective interest cost is a combination of many things. I think the biggest impact is basically because of the early prepayment of bonds that we did in the first half of this year, roughly about THB 23 billion. If you remember, we did another THB 24 billion in Q4 last year as well, where the arbitrage was roughly about 2.1%. Then in this quarter, we've done a further early prepayment of THB 10 billion of bank borrowings as well, which also helps in bringing the interest cost down. The recent round of issuance that we've done on the debenture is 2.67%, but that has a weighted average period of roughly more than six years.
So if I were to equate it with what we did in the previous round, which was in August, then it's actually roughly the same rate of interest. So even though the Thai baht government yields are actually increasing, still we've managed to bring the spread under control to manage the cost of borrowing as well. What's going to happen in the future? Of course, we have roughly THB 79 billion of debts that needs to be refinanced. Approximately THB 45 billion of that is basically the bonds, and we will continue to tap into the bond market to see how we can improve the cost of borrowing going forward. Of course, a lot depends on the Thai baht government bond yield as well.
But the fact that we've been able to reduce the spreads over the last many quarters, we believe we can still manage to do this in the future as well. But yeah, this is a bit uncertain as to what happens in the future. Okay.
Okay. Can we move on? Anyone else in the room? Yes, Khun Pisut.
Thank you. I have questions about the expected credit loss allowance that came down THB 826 million from the second quarter. Could you please tell us a bit about how much of it recognized in the P&L, and what is going to happen next in the next quarter?
This is on the bad debts, right? In quarter three, Khun Pisut, we have been benefited by trying to work on actually collections from certain old-aged B2B customers, and that is why you see a reduction in the bad debts. This is also one of our efficiency programs. When we look at all the customers, whether it is B2B and B2C, we try to improve the collections, and we see whether we can recover some of the old debts or not. That is why you see a reduction. I think bad debts as a percentage of revenues is trending quite well. You should see those consistent trends going forward as well.
Okay. Any more questions online? No. Anyone else from the room? Khun Pisut, yes.
My last questions. About your 5G subscriber, you said it is about 20.5 million subscriber out of 48 million. Yes, it is 42% adoption. Do you think, how much, what you expect these numbers going up in 2027? For example, if it is 50%, what do you think, what kind of ARPU direction do you expect to see when the people adopt more about the 5Gs? Because you have a lot of population coverage for the 5G, is this possible for all of the customers using 5G in this country? If that happen, probably in the long term, do you think ARPUs can go up to what certain level? Thank you.
I don't know if you can say something about the ARPU uplift that they have seen so far, but I can talk, if you have something on that, I can talk about the future.
I think what we see when a customer migrates from a 4G or 3G handphone to a 5G handphone, we see a 10%-15% improvement in the ARPU, which is basically consistent with what the industry sees as well. A bulk of this increase is basically coming because the customer buys a more expensive handset, and he moves to a higher pack fee or a higher monthly recurring fee, and that's where the 10%-15% increase comes from. Also, an increase comes because the customer consumes more data, and that's why a higher pack fee is relevant to the customer as well. What part of it is because of higher consumption and what part of it is because of a more expensive handset is very difficult to say, but I would say maybe 70%- 80% is because of more expensive handset.
But keep in mind, consumption definitely increases on the move from 4G to 5G.
Going forward, of course, we want to move that 42% closer to 100%. It's a factor of two things. One is handsets. There are still several customers out in the mass market that do not have a 5G-enabled handset. We are tracking that, and as soon as we see a customer's now getting a 5G handset, we will do add on the line also over-the-air commissioning of that handset. That we do systematically. Now, the part is spectrum-related. We do have some 5G offerings out in the remote areas, which we are not happy with. Now we are aggregating the spectrum bands we have, such that we can offer much better 5G services. This is the refarming we do now on the 2.3 GHz spectrum. This we have started with, and this is going to go into next year as well.
In the midst of next year, I think you will see that good 5G coverage is much better than what it is today. Then hopefully, more customers have also got a 5G-enabled handset. How fast is it going to move up? I don't know. But we are fully aware of the 10%- 15% extra ARPU increase, this is something that we do very systematically.
Okay. Thank you. We will take the last question from Ranjan.
Yeah, thanks, [inaudible].
Ranjan, you're muted.
Hi. Sorry. I just want to ask a quick follow-up to my earlier question. If you have some THB 70 billion of refinancing next year, and you have seen like 50 basis points decrease in financing cost from third quarter 2025 to third quarter 2026, is it fair to assume a pretty meaningful decline in interest expense next year?
Ranjan, this depends on the government bond yields, actually whenever we go to the market. But if based on the numbers that you see just now, that there is a 50 basis points reduction, then yes, the decline will be meaningful. But like I said, it also depends on how the yield curve is, as and when we go to the market to raise bonds.
Got it. Thank you.
Okay. Thank you, everyone. That's the end of our presentation for the third quarter. We see you next time. If any questions have been unanswered, you couldn't get a chance today, please reach out to me, and we'll be in touch shortly. Thank you and take care.
Thank you to everyone. Thank you.
Thank you.