Thailand's TrueMove Grows Falters on Unfavourable Tariffs
Third-placed Thai mobile operator TrueMove turned in its weakest net additions performance for more than two years in Q1 2008 with just 368k new customers joining its service, compared with an average of 1.1m per quarter in 2007. As a result, proportionate growth fell from 7.4% in Q1 07 and 7.5% in Q4 07 to 3.0% in Q1 08, taking the customer base to 12.45m.
Click to enlarge
TrueMove: IC Payments by Type, Q1 07 - Q1 08
The company blames the slow-down on unduly high pricing in Q4 07, which presumably detracted from the attractiveness of the company’s offerings to new subscribers, as well as causing some existing users to switch providers. Owner Truecorp adjusted its tariffs in Q1 08 to better compete with rivals AIS and DTAC, although usage continued to fall, which combined with the price decreases to push ARPU another 5% lower to Bt145 per month.
Year on year, ARPU was off 36%, which the company attributes to lower usage and the dilution of the customer base by lower-value subscribers.
The knock-on effect of the tariff changes in Q1 08 was that outgoing minutes to the other networks increased, making True a net payer of the IC charges introduced last year. The combined result was a 59% increase in network operating expenses to just over Bht4bn. Of course, under the new regime the company also books IC revenues, boosting its Q1 turnover by 19.8% year on year, compared to underlying growth (excluding IC) of just 2.9%. However, this was not enough to prevent a 10% decline in EBITDA – where the net effect of the inclusion of IC is seen – from Bht1.96bn to Bht1.76bn. D&A charges were under control, increasing in line with revenues, after an adjustment in the restated Q1 07 figures, but operating profit was still off 29%, whilst net income fell by almost three-quarters as a result of an 11% increase in finance costs and a 40% reduction in tax credits.
It was the same story for Net Income at the group level as improvements in the online business were swamped by the decreases in mobile to produce an identical 73.8% decline. First quarter consolidated revenues (of which just over half are accounted for by TrueMove) were up 3.5% on an organic basis, but EBITDA rose by just 0.2%, although this was something of a victory given the drop in the mobile segment. It is the group figure which will be the focus for True, which has been encouraging bundled packages (mobile, internet, TV), increasing multiple-product subs to 1.5m.
Posted to the site on 29th May 2008
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