What Hinders DTAC after Acquiring 700MHz at the Same Price as TRUE and ADVANC?

All three telecommunication operators led by True Corporation Public Company Limited (TRUE), Advanced Info Service Public Company Limited (ADVANC) and Total Access Communication Public Company Limited (DTAC) had submitted an application to the National Broadcasting and Telecommunications Commission (NBTC), and later acquired a 15-year license for 700MHz spectrum at the price of THB 17,584 million to be paid in ten installments in 10 years.

The acquisition of 700MHz spectrum license is an exchange for an extended installment for the 900MHz license which all three operators had agreed upon.

TRUE who prior to the extension of 900MHz license installment needs to pay THB 64,434 million in 2020. With the installment extension, the company will pay THB 23,614 million in 2020, and THB 8,164 million per year from 2021-2025.

The amount of THB 64,434 million is a huge amount of debt that will limit TRUE’s movement for any future investments, but when the debt has been lowered to only THB 23,614 million, there will be more rooms for investments along with lower interest rate as well.

ADVANC is another company that will benefit from the extended installment. This allows the company to pay only THB 23,614 million in 2020 instead of THB 63,744 million from the investment of 900MHz spectrum license. ADVANC has a plan to continue the advancement in fiber optic market in the next year. The difference over THB 40,000 million of debt will provide an ability to invest more in AIS Fiber and other businesses.

ADVANC will save around THB 400-1,800 million worth of interest per year during the installment.

 

While TRUE and ADVANC are delighted with the extended installment and the acquisition of 700MHz spectrum license, DTAC seems to be weeping on the sidelines as the company needs to bear higher cost in 2020 from 900MHz spectrum license when the debt amounting THB 2,151 million to be paid in 2020, has turned to THB 7,917 million instead! The difference is almost THB 6,000 million!

Moreover, there is also an investment for 2300MHz with TOT as well! Will the higher amount of debt hinder DTAC’s liquidity?

Analysts expect a downside to DTAC’s estimated profit in 2020-2021 around 5-6% per year. Thus, led to a huge selloff on June 18, 2019, that plunged DTAC by 1฿.50/share or 2.88% to close at ฿50.50/share.