Analysts expect slight drop in AIS profit in third quarter

The Nation (6 November 2007)

Telecom analysts expect Ad-vanced Info Service (AIS) to post a slight decline in net profit in the third quarter, in line with the low call season.

The market leader with more than 22 million subscribers is however forecast to do better in the current quarter - the high call season - amid expected better consumer sentiment after the general election.

AIS is also expected to start booking interconnection revenue for the first time sometime next year. An analyst of one foreign brokerage house estimated AIS to post normalised profit of Bt3.45 billion in the third quarter, declining 5.1 per cent year on year and 6 per cent quarter on quarter, due to the seasonal factor.

According to the analyst, AIS has revised downward its net interconnection revenue to Bt3 billion per year from its previous estimate of Bt4 billion.

AIS has yet to book interconnection revenue, pending the green light from its concession owner TOT. The analyst said AIS was positive the state agency would grant permission to start recording such revenue in the first quarter next year.

Imposed last year by the National Telecommunications Commission, the regulations mandate telecom operators, which have already signed bilateral interconnection deals, to share voice and data revenue between the networks involved in the calls on a fair basis.

AIS, Total Access Commu-nication (DTAC), and True Move inked such deals last year.

TOT has opposed the regulations, as True Move and DTAC stopped paying the access fee to the state agency last November and have complied with the interconnection rules instead.

TOT has traditionally earned a combined Bt14 billion per year from three CAT Telecom mobile-phone concessions - True Move, DTAC and Digital Phone - which have paid the access fee to TOT to access different networks via TOT's facilities. According to Ayudhya Securities, AIS's net profit is predicted to drop 4 per cent on a quarterly and yearly basis to Bt3.523 billion in the third quarter, in line with the normal low season for calls.

Its combined monthly average revenue per user for prepaid and post-paid service is forecast to drop 7 per cent on a quarterly basis to Bt254. Overall revenue is estimated to be flat at Bt22.365 billion.

The company's performance in the last quarter is expected to pick up, given that this is the high call season and it is believed that call spending will surge when people are in a better frame of mind after the election.

AIS president Wichian Mektrakarn said late last week that the market sentiment is expected to turn better after the general election.

ACL Securities forecast that AIS's third-quarter net profit would dip 4.4 per cent year on year and 5.6 per cent quarter on quarter to Bt3.466 billion, due to the low call season and the economic slowdown. Overall is expected to remain unchanged on a yearly basis, but decline 4.2 per cent quarter on quarter to Bt21.718 billion. The brokerage believes AIS will start booking the interconnection fee during the first half of next year.