Speaker #1: My name is Naureen. I'm the Head of Investor Relations, and I will be walking you through our results today. Let me show you the financial highlights first.
Speaker #1: Our service revenue for the third quarter improved by 2% year-on-year, and this is if we exclude the seasonal Pay TV revenues. On a quarter-on-quarter level, we continued with our growth for the fourth consecutive quarter of 0.7%.
Speaker #1: Our EBITDA improved by 5.7% year-on-year, which is a 0.6% improvement from the last quarter. Our reported profit grew by 324%, which is 4.2 times last year.
Speaker #1: And with this, our service revenue EBITDA and net profit are at our all-time high since the amalgamation. Our leverage reached 3.6x, which is a 0.5-turn reduction year-on-year and a 0.1-turn Q-on-Q, and this is also our all-time low leverage since we have started this new company since the amalgamation.
Speaker #1: And the dividend that we have declared for the third quarter is 5.5 billion, which translates to 16 satang per share, 79% payout ratio for the 9 months.
Speaker #1: Again, once again, this is our highest ever dividend since the amalgamation. If I walk you through the service revenue recovery since the first quarter of 2025, if you remember, we had a network outage incident in Q3 25, which led to us bottoming out on the top-line performance.
Speaker #1: But since Q3 25, we have turned around our top-line performance, and each consecutive quarter, as you can see on the left side from Q4 to Q1 until Q3 26, we have grown each quarter.
Speaker #1: And let me remind you that the third quarter is generally the weakest quarter of the year because of various seasonality factors, but even then we delivered a strong growth on a quarter-on-quarter level for the third quarter this year.
Speaker #1: But this is not all exactly perfect. We do have certain areas which are weaker in our top-line recovery, such as the B2B and the Pay TV areas where our performance is not up to what we are expecting.
Speaker #1: And we have been working on both areas, which we will be showing you later on with our next results. What the top-line performance translates to is, if you see on the right side of our EBITDA development, it's consistently improving EBITDA since the beginning of our company.
Speaker #1: On a Q-on-Q level for this quarter, we've achieved a growth of 0.6%, which is both a combination of top-line recovery as well as controlling the performance-related costs very well.
Speaker #1: So both of these are helping us in our EBITDA recovery. Let me comment a little bit on the macroeconomic side first, because quarter 3 has been an exceptional year for Thailand.
Speaker #1: We had extreme flooding towards the end of September, where about 1 million households have been impacted, including the capital Bangkok. A 21 provinces were impacted in total.
Speaker #1: Additionally, tourist arrivals, which is a big growth driver for Thailand, has been softer. It has been under the expectations, but it has grown quarter-on-quarter, but it has declined year-on-year.
Speaker #1: So we still have recovery left when it comes to tourists. And private consumption is slowly recovering. From the impact that we have seen from the war towards the beginning of the year, slowly private and public sector investments have been improving, and consumption has been starting to pick up.
Speaker #1: Having said this, how we have maintained ourselves during this challenging quarter, first is our network teams have worked seamlessly 24/7 to provide and make sure connectivity does not get interrupted despite the flooding situation.
Speaker #1: We were aiding the governments through several disaster relief recovery initiatives, and our response has been very critical in this time of need. Amidst all of this situation, we are quite pleased that we still have organic growth in our business.
Speaker #1: Even though the growth factors externally that we expect did not come into the way we were expecting, the organic growth from the base has been quite good when it comes to mobile.
Speaker #1: And part of the growth is also coming because of increased customer consumption. And as I mentioned earlier, the cost management that we are doing is what is helping us in maintaining our EBITDA trajectory.
Speaker #1: Now let me go into the details of the performance. Our service revenue for a year-on-year, if I take out the domestic roaming, is a 2% improvement.
Speaker #1: And quarter-on-quarter we continue to improve as I've shown you already. If I take out both the Pay TV seasonal revenue, which is music and entertainment, concert revenue, our service revenue actually improved 2.1% year-on-year, and the main growth drivers have been mobile and broadband segments.
Speaker #1: If you look at the middle graph, you see that the mobile growth is almost 1 billion. If you take out NT domestic roaming, it's 0.9 billion improvement in the business.
Speaker #1: And broadband has grown about 100 million also. The decline is mainly coming on account of the Pay TV business, which this quarter there is an exceptional decline because of the loss of concert revenue.
Speaker #1: But generally also, this business has been declining. On a total revenue side on the right side, if you see, we have improved quarter-on-quarter. We are starting to normalize the effect of the network acquisition impact.
Speaker #1: So the spectrum rental revenue that we were getting, that's also starting to get normalized now. So the overall top-line improvement is coming on both service revenue improvement as well as product sales improvement.
Speaker #1: The iPhone released pretty late in September, so there's a minor benefit from the iPhone release in the third quarter. Moving on to mobile, our mobile growth is 2.8% on a reported basis.
Speaker #1: But if we take out the impact from the domestic roaming revenue, we have a 3.1% year-on-year improvement in mobile. Mainly mobile growth is coming year-on-year because of both prepaid and postpaid business improvement.
Speaker #1: On a quarter-on-quarter level, mobile improvement is 0.8%. This is mainly driven by the growth in prepaid. There is a significant growth in the prepaid business that we've recorded in Q3.
Speaker #1: Our subscribers in prepaid grew by 95,000 this quarter, and our postpaid subscribers increased by 47,000 this quarter. On a year-on-year level, that is a 3.9% improvement in subscribers.
Speaker #1: On ARPU, we have broken down the impact of the Ministry of Education SIM cards this time. So Ministry of Education is postpaid SIM cards, 45 BATH per month, and they are for 5 years.
Speaker #1: So this will be a recurring revenue for us. On the revenue line, it's actually quite small because it's 45 BATH. But it will be a recurring incremental revenue for us.
Speaker #1: This diluted our postpaid ARPU a little bit, which is why we have now shown you both the reported ARPU, which is the solid line, and the dotted ARPU, which excludes the MOE SIM card effect.
Speaker #1: And that also translates into the blended ARPU. So blended ARPU reached 222, normalized is 224. Postpaid ARPU is 413, reported, but normalized for the Ministry of Education SIMs is 420.
Speaker #1: And our prepaid ARPU has a healthy growth of 4 BATH Q1Q, reaching 134. On broadband, we have a we've split the business reporting into two lines.
Speaker #1: One is B2B and one is B2C. If you look at the bottom blue part, our B2C broadband revenue has improved 5.8% year-on-year. And on a year-on-year level for B2B, we have a decline of 12.1%.
Speaker #1: And the total reported revenue improved by 1.1% year-on-year. The main reason for the decline in the B2C part is usual projects. These are government projects.
Speaker #1: The project expires; therefore, the revenue did not come in. We have partially renewed part of this project for Q4. So we do expect the revenue to come in Q4.
Speaker #1: The project lasts several years, so it's a recurring revenue that will come on based on this project alone. So the main decline you see is the expiration of the project, which has been renewed already.
Speaker #1: For subscribers, we've reached 3.3 million actually, we've increased 30,000 subscribers Q1Q. ARPU improvement of 4 BATH. Which is just driving the business on the B2C side.
Speaker #1: Part of this is also coming from the broadband network modernization that we are doing. We started this end second half of last year, so we are continuing this.
Speaker #1: It will still take us a few more quarters to finish the network modernization. This is basically legacy network that we are now improving one by one.
Speaker #1: So this will take some time. But these are the early benefits you see, both on top-line improvement and subscriber improvement, which is coming because of the network and experience improvement we're driving.
Speaker #1: On TV, we have also split the revenue a little bit more in details to give you a more clearer picture. The pink part is our subscription revenue, which comes from linear and OTT subscription.
Speaker #1: The middle section is the concert revenue. This is seasonal. So if you see that Q3 26 last year, we had a seasonal benefit, but in Q2 26 and Q3 26, we don't have the seasonal benefit.
Speaker #1: In fact, from Q2 to Q3, it has also declined. So this is the seasonal reason that the Pay TV business has declined 34%. On a subscription level, we are also recording a decline.
Speaker #1: Basically, the linear TV decline is not enough to offset the growth that we see in our OTT platform. So we have two platforms, two ID and TVS now.
Speaker #1: They are growing, but the linear TV portion the subscription revenue portion is declining. So it is not enough to offset the growth in the OTT business.
Speaker #1: The subscribers have also declined Q1Q, 3.5%. And ARPU improvement of 3 BATH, which is 7.3% year-on-year and 1.1% quarter-on-quarter. On OPEX, we have a decline of 9.5% year-on-year.
Speaker #1: Majority of this is coming because of the spectrum acquisition benefit. I would like to remind you that the spectrum acquisition benefit is normalized in Q3.
Speaker #1: It started in August, so August to July, it has already been normalized in the third quarter. So we have one month benefit in the third quarter.
Speaker #1: And two months benefit last year. This is a shift from OPEX to CAPEX, basically. So it is no longer impacting our EBITDA. On the regulatory cost, we've explained already.
Speaker #1: This is a effective rate adjustment, which is why regulatory cost is increasing. On a Q1Q level, we had a one-time benefit in the previous quarter, which is why the baseline for previous quarter was lower.
Speaker #1: Network cost, similarly, we had an adjustment. We got a discount from a vendor negotiation. Where in Q2, we recorded the benefit of the first 6 months.
Speaker #1: So Q1 and Q2 were both recorded in Q2. So Q2 was the baseline was lower. Q3 going forward is more of the normalized baseline to expect for cost.
Speaker #1: Cost of sales is a function of our product sales. So as iPhone has released in September, so we do have some costs related to that.
Speaker #1: On a device margin level, we are still positive. Our SG&A is marginally declining Q1Q. This is because we have improvement in our bad debt collection.
Speaker #1: And also, it's a seasonally lower marketing quarter. Q2 had higher marketing expenses. And other cost of providing services, which is directly linked to our service revenue line items, which is what I mentioned to you in the very beginning.
Speaker #1: The cost related to our performance. This has been flat Q1Q. Our EBITDA improved 5.7% year-on-year. And 0.6% Q1Q. This is an improvement of almost 9 billion since the amalgamation, which is 46%.
Speaker #1: Our EBITDA margin is at 68.4% to service revenue and 60.8% to total revenue. Our EBITDA improvement this quarter is mainly coming because of the growth in our top line.
Speaker #1: And from the benefit of the spectrum acquisition, which I just explained. Additionally, we have also controlled our operating expenses really well, which is also benefiting EBITDA.
Speaker #1: But majority of it is coming because of the top line improvement. This is our all-time high net profit, 6.7 billion reported profit. Normalized for one-time impact, which is about 300 million.
Speaker #1: Our profit is actually coming to 7 billion again, an all-time high for us. This is a growth of 4.2 times year-on-year. And almost sort of a flattish Q1Q, 1.8% if you want to be specific.
Speaker #1: The one-time effect of 300 million is asset write-off. As I mentioned to you, we are modernizing our online network. So there is some assets that will be that will become redundant.
Speaker #1: So we're writing them off. It's about half of this total amount. And the remaining amount is related to our mobile network asset write-off. On our financial cost decreased, 11.8% year-on-year.
Speaker #1: And 2.8% quarter-on-quarter. This is because our effective interest rate also declined. And our debt is also reduced. Our depreciation marginally decreased year-on-year, while it increased 1.9% quarter-on-quarter.
Speaker #1: This is because of one extra day in this quarter compared to Q2. And we have new CAPEX investment. Coming to CAPEX, this quarter's CAPEX is 8.1 billion, as you can see it's higher than the second quarter.
Speaker #1: Which leads to CAPEX to sales ratio of 17%. But if I look at a full year level, our CAPEX is now 17 billion. And our CAPEX to sales ratio is 12%.
Speaker #1: Our CAPEX guidance is 25 to 27 billion. So we're well within our range and we're comfortably going to meet the guidance. If I want to split CAPEX to you, 55% of our CAPEX investment for the quarter went into our mobile business.
Speaker #1: 30% is in the broadband business, which also includes the B2B. So both of these are network investments. And 15% is non-network, which is IT and other areas.
Speaker #1: Then our leverage we recorded a decline of 0.5 turns from the last year. So 3.6x. This is our all-time low. With debt coming to about 408 billion.
Speaker #1: Our effective interest rate reached 3.4%, also all-time low. And our remaining debentures to be issued is remaining debt to be paid off is 19 billion as of for the fourth quarter.
Speaker #1: I would like to mention that during October, we launched new debentures of 8 billion. About 2.6% weighted average interest, which is also another low for us.
Speaker #1: One of the reasons that we've been able to bring down our EIR is because we've done some early prepayments of bank borrowings as well.
Speaker #1: And we've done debenture callbacks in the first half of the year, about 23 billion. And bank debenture paydown was 10 billion. Sorry, bank borrowings paydown was 10 billion.
Speaker #1: Then coming to dividend, we declared a dividend of 5.5 billion, which is 16th of town. The record date will be 16 November. And the payment date will be 1 December.
Speaker #1: With this, our dividend for the full year comes to 15.5 billion on a net profit of 19.8 billion, which is 79%. So our guidance has always been that dividend will be about 80% payout ratio.
Speaker #1: So we are in that 80% payout range. Then to walk you quickly through the 9-month development. So on a reported level, our service revenue is at 0.3%.
Speaker #1: But if I take out the seasonal revenues and the domestic remote revenue, actually, we have increased 1.1%. Our OPEX decline is 23.6% on a 9-month level.
Speaker #1: And EBITDA improvement is almost 10%. And net profit improvement on a reported level is 14.6 billion, normalized level is about 7.1 billion. So with this, let me end my presentation.
Speaker #1: And I can move on to the questions. So the first question is, this quarter EBITDA grew significantly faster than revenue. I'd like to know if this is largely due to cost synergy, reduced network cost, or improvement.
Speaker #1: Okay. So as I mentioned, EBITDA growth is mainly coming because of top line improvement. We also have synergy benefits. So synergy initiatives we've done in 2025, which on a year-on-year level is helping us in 2026.
Speaker #1: But on the spectrum acquisition, so the spectrum acquisition, the contract with NT expired in August last year, 3 August last year. So from 3 August, this year, it has normalized.
Speaker #1: So there is a benefit on one month coming from that spectrum acquisition. Let me remind you, 12 months, the benefit to EBITDA was 7.1 billion.
Speaker #1: So that we have already now completed. Okay. Company stated excluding impact of education project, postpartum would be 420 baht, and remains stable. Impact of this project on ARPU and revenue, whether the company expects ARPU to return to growth.
Speaker #1: Yes. So the ARPU impact is 7 baht. It's pretty clear on the reports that we have. ARPU impact is 7 baht. These SIM cards are valid for 5 years.
Speaker #1: These are postpaid SIM cards. So there will be monthly revenue coming in of 45 baht. And we have a subscriber base I believe it's a little under 400,000 subscribers that we have.
Speaker #1: This will be recurring. And we are very happy to participate with the Ministry of Education because it helps us connect the youth to the internet.
Speaker #1: And we are enabling the youth to get into digitalization aspect as well. So this will be recurring. And the impact to subscribers is 7 baht.
Speaker #1: And it gives us incremental revenue, 45 baht per customer. Broadband shows 3.9% increase in customers and 2% increase in ARPU. But pay TV decreased by 34%.
Speaker #1: The broadband and the pay TV are not connected. I'm not exactly sure I understand your question. Maybe if can you check the Thai version.
Speaker #1: Maybe the question is different. But what I see is that the broadband and pay TV, these two are not connected. The pay TV revenue decline mainly because of the seasonal concert revenue that we didn't have, as I showed you.
Speaker #1: But even on that, the subscription revenue for pay TV has been declining for many quarters now. This is because the linear TV is declining in the world of OTT apps, right?
Speaker #1: So we are not able to compete with the Netflix and the Disney and such. So we are doing our own content. But the linear TV has been declining.
Speaker #1: But maybe I didn't understand your question. The broadband and TV are not linked. There are several questions around net debt to EBITDA. So maybe let me answer all in one go.
Speaker #1: Our net debt to EBITDA right now is 3.6. The target we've given for 2026 is 3.5. And the target we've given for 2028 is 3.
Speaker #1: This includes a dividend payout of 80%. And as you have seen, we have been very effectively able to manage our debt and pay down our debts.
Speaker #1: And we are issuing new debentures at lower rates every time. So our decision to do the dividends and deleverage both are going to be balanced.
Speaker #1: So we want to make both our debt investors and equity investors happy. I hope that answers there are many questions on leverage. So I hope that answers all the questions.
Speaker #1: Let me just try to come down to this there's a question on B2B online revenue decreased 12% due to lower usual revenue. Yes. That's right.
Speaker #1: This is temporary because of the you're absolutely right. This is because the contract expired. And the contract has been renewed and it will hit us in Q4.
Speaker #1: So the revenue will start to come back in Q4. So you're absolutely correct. This is a temporary project-based loss of revenue because of expiry of the contract.
Speaker #1: It is not structural. Okay. There's a question on tax. Company had an effective tax rate of approximately 2.6%. How long is this tax rate expected to remain?
Speaker #1: Okay. We have tax loss carried forward until the end of 2027. There is no cash tax being paid. Our effective tax rate, this year, will be low single digits.
Speaker #1: Next year, we're expecting mid-teens. And after we are after we have exhausted our tax loss carried forward, we should be paying the corporate tax level.
Speaker #1: So until 2027, a cash tax payment should not be expected. But this year, low single digit. Next year, mid-teens is the guidance on the effect on the effective tax rate.
Speaker #1: Currently, there are approximately 20.5 million 5G customers or 42%. We would like to know how much higher ARPU per 5G customers. Okay. We see about 10 to 15% ARPU uplift from 5G customers.
Speaker #1: This is purely consumption-driven. When a customer moves into a new handset, they enjoy the experience of using the handset as well as they enjoy the network that we provide.
Speaker #1: Both of those lead to a higher consumption. So it's a consumption-driven ARPU improvement of 10 to 15% 4G versus 5G. Okay. There's a long set of questions.
Speaker #1: Let me take one by one. Following the strong performance in 3Q, what is your outlook for overall business in 4Q? Which business segments will be key growth drivers?
Speaker #1: So we've actually guided on this a little bit in our MD&A we are maintaining our guidance for the full year, which is 1 to 2% on service revenue.
Speaker #1: And we are saying we look to meet towards the lower end of that guidance. First of all, fourth quarter is seasonally high quarter. It is peak to a season, which also continues into the first quarter.
Speaker #1: So that will be a benefit we will be seeing coming in. This also drives the macroeconomic development of Thailand. So we hope to see more macro movement, more improved more improvement in the macroeconomic situation.
Speaker #1: The GDP has been revised up by the Bank of Thailand. And we do not see a significant impact of the flooding as of now to kind of move the GDP.
Speaker #1: So fourth quarter right now is looking good. And for our performance, mobile and broadband businesses, I've shown you the underlying performance. So 3.1% on mobile, 5.8% on broadband.
Speaker #1: So we are confident that this growth will continue. So and we are expecting that B2B revenue to come in from the usual projects. So all in all, given this picture, we're pretty confident in meeting the lower end of the guidance that we've provided.
Speaker #1: And you're asking which business segments? It'll be both the mobile and the broadband segments. B2B is blended in the in both of them. So B2B is also going to be there.
Speaker #1: There is a question on long-term profitability target. We don't really provide a profitability target. We give you an EBITDA margin sort of a guidance.
Speaker #1: So for 2026, the margin we've guided to service revenue is 68%. We are at 68.4 in the third quarter. And for 2028, we are assuming a we're guiding an EBITDA margin of 69%.
Speaker #1: I've already answered the question on the mobile growth. I've answered the question on 5G. I think there's a lot of repeated questions I've already answered.
Speaker #1: TV decline I've answered. Estimated tax rate, I've also answered. We'll be accrued by average for each quarter. Can you please check the Thai? Maybe the English is not right.
Speaker #1: There's a question, why does true prioritize dividends over debt reduction despite its leverage of 3.6? We do not prioritize either. We are prioritizing both.
Speaker #1: As I mentioned, we want to do both because we have a big set of investors who want dividends and we have a big set of investors who want us to pay down our debts.
Speaker #1: So as management of the company, we have been balancing both. There is no prioritization of dividends. And as we have shown you, we have very effectively managed our debt and our leverage situation.
Speaker #1: So we are very confident that we can continue to do both. Crews growth plan for Q4 26 and FY 27. We don't give growth plan per quarter for the full year guidance.
Speaker #1: It is 1 to 2% on service revenue and 7 to 9% on EBITDA. On service revenue, we are guiding that we will meet towards the lower end of the guidance and we are very confident on meeting the EBITDA guidance.
Speaker #1: Nine-month EBITDA is already at 10%. We will share full year guidance when we release the fourth quarter results. For 26. Has the memory shortage situation eased and how much is it affecting true smartphone cost and sales?
Speaker #1: The memory shortage situation is not a direct impact on our business. This actually impacts the smartphone OEMs more. We've done quite well in the iPhone sales this quarter.
Speaker #1: I'm not able to share more details because iPhone sales will follow within Q4. But until Q3, what we have shown you, it's been a good, healthy improvement.
Speaker #1: Q1, Q2, and year on year. There are many questions about growth in 2027 and there's one for 2070. I just.
Speaker #2: Okay. So maybe the English translation. So again, for 27, we will be giving you guidance when we report for fourth quarter. I'm not able to comment on this in the third quarter.
Speaker #2: I see a lot of repetition on the related questions to TV decline, B2B decline. I've already answered these. There's a question on capex. Okay.
Speaker #2: We would like the company to provide a breakdown on maintenance capex, growth capex. Okay. I take your suggestion, but we will not be breaking down our capex any further.
Speaker #2: It is competitive information and we would not like to be breaking this down anymore. But I take your comment. Thank you for the suggestion.
Speaker #2: There's a question on depreciation. Company change, useful life of assets. Okay. I think the first part of the question, let me answer that first.
Speaker #2: The useful life of asset, has an impact for the full year? This you will find in our first quarter financial statements as well as MDNA.
Speaker #2: Also have it in the MDNA section. So once again, this one on the investment. So we will give you capex guidance for 27 when we release quarter four.
Speaker #2: But we have a capex to sales guidance for 26 and 28. So it's a 14 to 15% in 26 and 28 is 13 to 12 to 13.
Speaker #2: So already for this year, we're sitting at 12%. So we don't see any dramatic increase in capex. Right now. And of course, this does not include any spectrum auctions.
Speaker #2: Our capex guidance for 26 includes the online network modernization that we are doing. So 25 to 27 billion already includes this. There is a question on the dispute.
Speaker #2: Yes. We have a lump sum provision which covers many of the outstanding disputes that we have. We do not share the details for strategic legal reasons.
Speaker #2: But we do have a lump sum provision. Which covers many of the ongoing disputes right now. There's a question on the CVM. There is a cumulative value created of 590 million.
Speaker #2: Does it represent increased in revenue, increased profit? This is revenue. This is revenue on a few different aspects. One is the CVM project allows us to retain customers.
Speaker #2: So it's also the retention of the customer, which we translate into a revenue value. It is the upselling CVM is helping us upsell to our existing customers.
Speaker #2: So it also includes the revenue that comes from upselling. And the prevention of churn. So customers who would have churned out but did not because of some CVM activity we've done.
Speaker #2: The 590 million that you see is coming on top of our existing CVM project. So this is the value created by this partnership alone.
Speaker #2: And this is all revenue. There is no significant cost attached to this particular benefit that you've seen. But you are correct. This is a cumulative value that has been coming in since we started this project.
Speaker #2: So it's not something you can see in the quarter three numbers. But it's been cumulatively adding since we started this project. Will there be any additional dividend distribution for FY26?
Speaker #2: Yes. We will be declaring a dividend every quarter. So there will be a dividend for the fourth quarter. If you're asking me if it's full year 26, no.
Speaker #2: It's it will be based on the fourth quarter. So it will be a dividend for the Q4 of 2026. Okay. I don't see any more questions.
Speaker #2: Okay. We can wait a few more minutes for questions. Okay. If then there is no further questions, then maybe we can end. Thank you for joining us.
Speaker #2: In case you do have questions, we could not answer today. Please reach out to us. We are happy to help you anytime. Thank you.
