Jan-Feb: The Most Crucial Months for Mobile Operators

Kasikorn Securities (KS) has recommended “Weight Increase” on Telecommunication Sector, especially mobile operators in which KS expected to be taking effect the least from the slowdown in the domestic economy due to the fact that internet data usage increases constantly, a reasonable competitive price and the installment for 4G investment has only a few years left.

 

KS believes that there are two major factors that will increase the share prices of stocks in the telecom sector which are an increase in services revenue and all three operators acquire 5G concession.

 

The Effect from the Renewed Unlimited Data Package

The share prices of ADVANC, TRUE and DTAC have fallen since September after all three operators brought back an unlimited data package, causing investors to worry about the capability of increasing their earnings.

However, the effect should be limited due to the requirement of this package requires a new prepaid number or switching service operators. Meanwhile, the worry should be eased if all operators could indicate an increase in those numbers in their 4Q financial statements.

 

The Worry of 5G Bidding

KS believes that both domestic and foreign investors are slowing down their investments and divesting in all three operators in fear of a new behemoth company joining the bidding which would lower the share of 2600MHz license from the three operators. The share prices of ADVANC, TRUE and DTAC are expected to soar once the registration (2 January – 3 February) for the bidding is completed and no new competitor appears.

 

Must Keep a Close Eye on

1) 700 MHz bidding

2) The limit of how many licenses can one operator gets from 2600 MHz

3) How many licenses each operator gets after the bidding on 16 February 2020.

 

Risks

Investors may make a selloff if the damage from an unlimited data package continues to worsen in 4Q as well as an entrance of new competitors in the 5G bidding.