AIS offers flexible package

AIS offers flexible package
Bangkok Post (12 October 2007)

Advanced Info Service yesterday introduced what it described as a tailor-made service that would automatically change the profile of each customer according to actual calling time. AIS president Wichien Mektrakarn said that the service, called ''Flexible'', was tailored to the calling behaviour of prepaid customers on both short-time chat and long-time chat packages. He said studies of the behaviour of each prepaid customer showed that those who chose a short-time chat package sometimes also wanted to talk for a longer period of time, while those who chose a long-time chat package occasionally wanted to make shorter calls. Therefore, the rates for such calling behaviour did not reflect actual usage because each package had a different rate for the first minute of a call, he said. But with the Flexible package that AIS has developed from its Intelligent Network to Super Intelligent Network, or Super IN, customers would get more for their money. If customers make calls that are shorter than three minutes, Super IN would charge a short-time package rate, and it would charge the long-time package rate if a customer chats for more than three minutes. Using the Flexible package requires a 30-baht monthly payment, he said. AIS will introduce two more packages developed from Super IN next month that would tailor packages to individual needs. AIS now has six million users on its long-chat package and two million on its short-chat plan.

DTAC looks to refresh brand

DTAC looks to refresh brand
Bangkok Post (12 October 2007)

Second-ranked mobile operator DTAC is preparing for a major revamp of its business strategy to strengthen core voice-based services. The Norwegian company plans to launch a ''brand refreshment and service refeeling'' campaign on Oct 24, as part of its strategy to differentiate itself from major rivals AIS and True Move. ''The campaign will be a whole new thing for the local mobile industry,'' said chief commercial officer Thana Thienachariya. AIS and True Move have already implemented strategies to expand into data communications including wireline and wireless broadband internet, voice over Internet protocol (VoIP) and IP television. ''Our policy is to focus on the core voice-based services,'' he said. Mr Thana admitted that it would be too late for DTAC to catch up with its rivals in terms of convergence strategy since it had done little network development in this regard. The company plans to diversify into new wireless-based services over the next two to three years as he believed that emerging international direct dialling (IDD) or third-generation (3G) services would take several years to gain popularity in the Thai market. Mr Thana also said that competition in the local mobile market would shift away from subscriber acquisition to retention in 2008 as the market is close to saturation. The local mobile-phone market has witnessed bullish development in the past three to four years, with the growth rate of net new subscribers ranging from 20-30%. The country's penetration rate of mobile phones is now around 72% of the population with 47 million users. AIS currently has 23 million customers, followed by DTAC with 14.5 million and True Move 9.1 million users.
The industry expected up to 11 million new customers in 2007. AIS alone expected five million new customers, DTAC four million and True Move two million. However, Mr Thana said the growth rate would be slower next year and would drop to single-digit growth in 2009. Penetration would be well above 80% next year, with an additional 10 million subscribers. Mr Thana acknowledged that the mobile industry had registered flat revenue growth for the past two years. But he said DTAC recorded positive growth last year, and expected to meet its revenue target growth of 8-15% this year. Revenue from the three major mobile operators is expected to reach 200 billion baht this year, 50% of which would come from AIS. However, AIS's profits account for up to 90% of the industry's total earnings given its size. Mr Thana also said that operators with strong customer retention and innovative products and services would win customers next year. As part of its retention strategy, DTAC yesterday introduced 50,000 ''twin number'' SIM cards for 100,000 numbers. Customers who buy the prepaid twin SIMs are allowed call each other free around the clock. The company will charge 1.50 baht a minute for calls made to all networks.

SET surges to 11-year record

SET surges to 11-year record
Bangkok Post (12 October 2007)

Bull market fuelled by foreign investors Thai stocks closed up 1.6% yesterday _ their highest level in almost 11 years _ amid continued foreign buying in large-cap stocks. The Stock Exchange of Thailand index closed at 889.06 points, up 13.96, in brisk trade worth 33.92 billion baht. Energy stocks rose 3.24%, banks closed up 1.83% and transport shares gained 2.29% as the main index reached its highest point since December 1996. Foreign investors were net buyers of 2.83 billion baht worth of shares, with retail investors net sellers of 2.77 billon and local institutions net sellers of 63.39 million. The index is up 9.8% in the past month and 25% over the past 12 months. Sentiment was bullish as other regional markets closed mostly higher, with Tokyo up 1.64% and Seoul gaining 0.9% to a record high. Markets in Hong Kong, Shanghai, Singapore, Mumbai, Jakarta and Sydney also finished at record levels. Adisak Kammoon, a research head of KGI Securities, said foreign capital inflows propelled the Thai market yesterday. Interest rate cuts in the US in response to the sub-prime mortgage crisis have led to a shift in funds from equities to government bonds and bank deposits. Mr Adisak said fund managers were shifting back to equities, particularly in Asia, in search of higher returns. ''That's the main reason why Thai stocks have surged sharply over the past few days. Stronger foreign confidence toward the local market,'' he said. Analysts speaking at a investment seminar yesterday, said foreign inflows would help drive the main index higher next year, although a technical correction and profit taking could cause the index to drop to 840 points in the short term. Padermphob Songkroh, a deputy managing director of Bualuang Securities, said the Thai bourse would benefit from capital flows into Asia, as investors were boosting their positions in Asian currency assets on expected weakness in the dollar. ''Now, the shift of funds from the bond market to equities is getting clearer as the yield curve of one-year government bonds at 3.47% is not different from fixed deposits of 3.35%,'' he said. ''In fact, the return on investment in equities should be 1% different from bonds. If the gap is narrowing, it means that stock prices may rise more.'' Visit Ongpipattanakul, a deputy managing director for research at Trinity Securities, noted that stocks typically benefited in the months before an election.
Equities typically yielded 5% gains three months before a vote and 2% one month before an election, he said. ''The SET index has outperformed regionally and it has a chance to rise more. If the Japanese yen continues to slide, then yen carry-trade loans will return,'' Mr Visit said.
Yen carry trades are transactions that institutional investors finance with low-interest Japanese yen loans. Other analysts noted that net long positions in SET50 index futures had reached 2,200 contracts, and could increase by another 1,000 contracts pointing to further gains for the main index. Wetang Phuangsup, director of capital flow policy for the Finance Ministry, said inflows totalled $8 billion in the first eight months of 2007 and were expected to reach $9 billion by year-end. Mr Padermphob said improving political stability had helped overall sentiment, but noted that 60% to 70% of the stocks that posted gains this year did not rise because of politics. Risk factors next year would include volatility in commodity prices and the derivatives market, he said. Among the most active stocks yesterday, PTT rose 10 baht to 348, Krung Thai Bank closed up 60 satang to 12 baht and Thoresen Thai Agencies rose four baht to 68. PTTEP gained nine baht to 151 and Bangkok Bank rose 4 baht to 127.

Local consumption key to economic lift

Local consumption key to economic lift
Bangkok Post (12 October 2007)

Building up local consumption could be key to driving the economy next year since exports are unlikely to perform as well, according to Dusit Nontanakorn, the vice-chairman of the Thai Chamber of Commerce. Since the new government and its ministers would take time to outline policies and adjust to running the country, it was vital for the private sector to help stimulate the economy for at least the first half of next year, he said at a press briefing yesterday. Mr Dusit said the chamber would propose plans and an urgent economic agenda for the new administration next month. The new government should not expect high exports, as the dollar value grew 16.4% year-on-year to $95.61 billion in the year's first nine months. In a related development, the University of the Thai Chamber of Commerce reported that the September consumer confidence index improved slightly after the general election date was confirmed for Dec 23. Sauwanee Thairungroj, vice-president for research at the University of the Thai Chamber of Commerce, said last month's CCI rose to 75.8 from 75.7 in August, although concerns about rising living costs stemmed largely from more expensive fuel and consumer product prices. The confidence index in the overall economy fell to 69.2 last month from 69.5 in August. The job opportunity index declined to 87.8 from 87.1. Only the index on future income rose a bit to 87.8, from 87.1 a month earlier, she noted. The chamber said the economy in the fourth quarter would remain slow and the government should speed up its budget disbursements, including the 15 billion baht set aside to improve the quality of life. The coming election, in which politicians and their supporters are expected spend between 20 billion and 30 billion baht, should boost the economy in the last quarter as well, she said.

Focus on keeping cellular customers

Focus on keeping cellular customers
The Nation (12 October 2007)

Cellular providers will concentrate on keeping customers next year, as the market approaches saturation. Thana Thienachariya, chief commercial officer of the second-largest operator, Total Access Communication (DTAC), said yesterday that next year would be the last that the industry would see growth in subscribers since the market would mature in the following years.
Penetration has already reached over 40 million out of the population of more than 60 million people. This year is expected to see 10 million new mobile-phone subscribers. Advanced Info Service (AIS) has more than 23 million, followed by DTAC with 14.5 million and True Move with 9.1 million. Thana said the implementation of national number portability expected next year would force operators to work harder to retain customers, as they will be able to keep their old phone numbers when they switch to a new provider. This will encourage churn as users hunt for the best deal among providers. DTAC has already prepared for the market to top out by launching what Thana calls "brand refeeling". It will introduce its new and radical business direction on October 24, but he declined to give details. This year DTAC expects its revenues to grow 8-15 per cent. The cellular business plateaued two years ago, due to intensifying price
wars. Recently AIS said it was unlikely to meet its net profit target for this year, but declined to specify the figure. Yesterday DTAC launched the "Twin Numbers" SIM package, featuring two SIM cards in one box with two virtually identical mobile-phone numbers. Users of the two prepaid SIM cards can call each other for free for 24 hours in one year. Calling to other networks costs Bt1.50 per minute, also for one year. The package is available in a limited edition of 50,000 sets priced at Bt99.

Cut in food sector growth

Cut in food sector growth
The Nation (12 October 2007)

The Federation of Thai Industries (FTI), the Board of Trade of Thailand and the National Food Institute of Thailand have cut the growth projection for the food industry this year from 10 per cent to 7.8 per cent. The move is the result of many negative factors, both local and international. National Food Institute executive director Yuthasak Supasorn said food exports had been affected by the baht's strength, shortages of raw materials, rising production costs, stricter trading barriers and a slowdown in the US market. However, exports of food products are expected to reach Bt608.047 billion this year, up 7.8 per cent from last year, because agro-products like rice, sugar, palm oil, tapioca, fruits and vegetables have recorded high growth.
He said exports of food products in the fourth quarter would grow more than in the first nine months, because the baht was more stable. Total exports of fishery products and canned pineapple will tend to drop in the fourth quarter, due to a severe shortage of raw materials and rising prices. The Manufacturing Production Index (MPI) increased 3 per cent year on year in the first eight months, driven mainly by refined and raw sugar. Meanwhile, the MPI for the canned-tuna and canned-pineapple industries dropped year on year. The Office of Agricultural Economics predicted that pineapple output would decline 14 per cent from last year. The price of pineapple in July was Bt4.68 a kilogram, up from Bt1.64 in July 2006. Due to tight supply, the price of tuna in the global market reached US$1,450 (Bt49,600) per tonne in August, up more than 60 per cent from the end of last year. Rice Exporters' Association president Chookiat Ophaswongse said rice exports in the first three quarters totalled 6.15 million tonnes, up 14 per cent year on year. He said total rice exports would surge in the fourth quarter, from an average of 650,000 tonnes a month to 850,000 tonnes, because Vietnam and India recently announced bans on rice exports, due to insufficient local supply caused by rapidly changing weather. The association plans to boost rice exports to 9 million tonnes next year, while Vietnam plans to export 5 million tonnes and India 4 million tonnes. Paiboon Ponsuwanna, chairman of the FTI's Food Processing Industry Club, said Japanese firms in the seafood industry were planning to move half of their production in China to Thailand, due to better-quality products. He declined to provide more details. Paiboon said he would meet representatives of the Japan Chamber of Commerce and Japan External Trade Organisation next month, in order to promote the Thai food-processing industry's potential and draw Japanese operators to invest here.

Huge capital inflow likely

Huge capital inflow likely
The Nation (12 October 2007)

Direct foreign investment to hit $10 bn this year: fiscal policy chief.

Capital totalling at least US$10 billion (Bt342 billion) is expected to flow into the Thai stock market this year, says Fiscal Policy Office (FPO) director Wetang Phuangsup. He said this was due to a lingering lack of investor confidence in the value of the US dollar. His statements yesterday coincided with a stock-market rally of 1.6 per cent, reaching a 12-year high of 889.06 points. Turnover was brisk at Bt33.92 billion. Foreign investors have bought Thai shares with a net position of Bt11.39 billion since early last month. Greater capital inflows into Asian bourses, including the Thai stock market, will be seen next year as investors' confidence in the dollar continues to be subdued and they diversify their investments into other countries, particularly in Asia, Wetang said. He was speaking in a seminar entitled "Portfolio Allocation for Profit: Preparing for the General Election". He estimates about $9 billion has flown into the Thai stock market in the past eight or nine months and that the amount will reach $10 billion by the end of the year. The massive capital inflow has been blamed for the sharp appreciation in Asian currencies, including the baht, and it may hurt growth in the region's economies, because they rely mainly on exports. There are nine or 10 Asian currencies that are more stable than the dollar, because their combined international reserves account for 60 per cent of total global reserves, he said. The continuing sub-prime mortgage problem in the US will be another catalyst for capital inflow to Asia. Wetang warned that the capital inflow might stall if there was a bubble in the Chinese stock market. Given the sharp rally in the Chinese market, he was most concerned about how much further north the market could go. The red-hot Chinese stock market has chalked up a 400-per-cent rise in the past two years, while its price-to-earnings ratio exceeds 30 - triple that of the Thai bourse. Trinity Securities deputy managing director Visit Ongpiattanakul said if the US Federal Reserve cut its policy interest rate at its October 31 meeting, then it would reflect a fully blown economic slowdown in the US, and money would be shifted from there to emerging stock markets, including Thailand's. "A half-percentage-point cut in the overnight Fed Fund rate at its previous meeting is the major force behind capital that is flowing into Asia. So we must keep our eyes on the Fed and whether it will cut the rate further. If it holds the rate at 4.75 per cent, a portion of the capital might flow back into the Wall Street market," he said. Visit said the Thai Stock Exchange of Thailand (SET) Index was highly likely to hover around 900-940 points ahead of the Fed's meeting at the end of the month. Based on its track record over the past three general elections, starting from the one in 1996, the SET Index is expected to surge one month ahead of the poll, he said. Bank, finance and communications stocks were at the centre of the previous rallies, and they all offered greater returns than the SET Index movement, at 5.9 per cent on average, he said. He recommends investors allocate half their stock-investment portfolios in debt instruments and half in cash. Bualuang Securities deputy managing director Padermpob Songkroh echoed the FPO's view by saying capital inflows next year would tend to be higher than those this year, following formation of the new government. He said he hoped the next government would ease or revoke the 30-per-cent capital requirement, as this would be a blessing for the Thai bourse. "We must consider whether the new government will abolish the 30-per-cent capital requirement. It is the highest rate in the world. Its repeal would be a good factor, not a bad factor. "Regarding the capital inflows next year, it will become clearer two months after the next government is set up," he said. Keith Neruda, head of Thailand research for global financial-services firm UBS, said in a recent report that changes in local buying behaviour were the main reason the Thai market could rerate sustainably above the recent trading range of its 33-per-cent price-to-earnings discount to Asia. Also, low growth and political uncertainty are unlikely to last throughout next year, even though economic growth may remain weak, he said.

Defaults by card users rise

Defaults by card users rise
The Nation (12 October 2007)

But customers off books after 3. Defaults on credit-card loans have been on an upward trend as debtors become more cautious about their spending. Sorasit Soontornkes, assistant governor of the Bank of Thailand, yesterday said credit-card holders had a lower capacity to service debt. He did not, however, elaborate. Despite this trend, non-performing loans (NPLs) on creditors' balance sheets have not increased significantly, largely because the card-issuers have actively written the bad loans off their books. "When the debtors cannot pay their debts over three monthly instalments, banks and credit-card companies write them off abruptly. As a result, NPLs in the business have not expanded hugely," Sorakit said. At the same time, cardholders have spent cautiously using their cards, as evidenced by a 2.4-per-cent increase in spending in August, compared with the previous month. This is a slower pace than the 6 per cent recorded in July, according to the central bank. Foreign full branches and non-bank companies registered contractions of 2.56 and 0.07 per cent respectively on a month-on-month basis. Domestic spending on credit cards rose slightly, by 0.27 per cent to Bt50.4 billion in August, after recording 8.81-per-cent growth in July. Cash withdrawals via credit cards expanded significantly by 12.36 per cent to Bt17.1 billion, compared with a 3.6-per-cent decrease in July.
Moreover, total outstanding loans using credit cards contracted for the first time in three months with a 0.52-per-cent decrease to Bt168.76 billion in August, compared with 0.38-per-cent growth in July. Non-bank companies and foreign full branches posted contractions of 1.19 and 0.34 per cent respectively, but Thai banks marked a slight rise of 0.27 per cent in August.
Sorasit said both new and re-entry credit-card NPLs in the banking system had been increasing. The figure, however, is not a concern as commercial banks have already set aside provisions in line with the new IAS39 accounting standard. "Each bank has enough capital to deal with rising NPLs, so we are not concerned," he added. However, Thawatchai Thitisakdiskul senior executive vice president of Krungthai Card (KTC), said the default rate on credit-card loans had increased due mainly to the Bank of Thailand's new regulation on the minimum monthly payment rate, which has made a significant impact on the debt-service capability of credit-card holders. The central bank introduced a rule requiring borrowers to make a minimum monthly payment of 10 per cent of their balance in July last year, up from 5 per cent previously. The economic slowdown and an uncertain political situation have also affected domestic consumption. These negative factors have hit the credit-card loan market, both in terms of expansion of the card base and an increase in bad debts. He said KTC kept control of NPLs by careful scrutiny of new-card approvals. The company will also help existing cardholders who have problems with debt servicing by reducing the loan amount for monthly payments. However, KTC has had to cancel some customers' credit cards when they have no potential to service their debt. The company's distressed debt currently stands at more than one per cent of total credit-card loans, which is lower than the industry's rate of about 4 per cent. Recently, Credit Card Club chairman Shoke Na Ranong said most credit-card providers faced higher NPLs. This is mainly caused by factors including the economic gloom and the central bank's July 2006 rule change on payments. However, card issuers have not yet disclosed their official data on bad debts.