Fitch: 1.8GHz Spectrum Win, Network Improvement Crucial for DTAC

Stocks and Financial Services Press Releases Thursday May 10, 2018 11:14
Bangkok--10 May--Fitch Ratings

Total Access Communication Public Company Limited's (DTAC; BBB/AA(tha)/Stable) market position will be strengthened if it can successfully secure the 1.8GHz spectrum that will be up for auction as its relatively weak spectrum portfolio has constrained its business, says Fitch Ratings.

On 7 May 2018, Thailand's National Broadcasting and Telecommunication Commission announced the rules for the auction of three slots of 1.8GHz spectrum with a target auction date of 4 August 2018. The regulator has also set the starting price at THB37.5 billion for each of the slots.

Fitch expects DTAC to win one slot of the 1.8GHz spectrum as it has a greater and more immediate need for new spectrum and therefore more incentive to secure the frequency in this round of auction than other likely bidders - Advanced Info Service Public Company Limited (AIS; BBB+/AA+(tha)/Stable) and True Corporation Public Company Limited - who, in Fitch's view, should have enough spectrum to support their operations in the medium term.

However, the potentially high acquisition cost for the spectrum and an additional payment to use TOT Public Company Limited's (TOT) 2.3GHz spectrum could put pressure on DTAC's cash flow and financial leverage in the medium term.

DTAC needs new spectrum over the medium term to replace the 35MHz that it is losing as its 2G concession will expire in September 2018. We expect the company to need the 1.8GHz spectrum, even though it has the 2.3GHz contract with TOT, as DTAC is still largely reliant on the frequency to provide 3G and 4G services for its customers.

Fitch believes DTAC's loss of market share to competitors over the past few years was partly a result of its inferior spectrum holding. Additional spectrum and more network investment could help improve DTAC's network quality and slow its decline in market share and service revenue.

Fitch expects DTAC's EBITDA to decline by around 4%-7% to THB27 billion-28 billion in 2018 from THB29.1 billion in 2017, mainly due to payment for the 2.3GHz contract with TOT. In addition, the likely high upfront spectrum payment will raise net debt and financial leverage over the next two years. However, DTAC has moderate financial leverage, so we expect its FFO adjusted net leverage to remain below 2.5x in the next two years (end-1Q18: 1.3x), in line with its current ratings.

DTAC announced on 23 April 2018 it had entered into a partnership agreement with TOT to provide wireless service on the 2.3GHz spectrum. DTAC has to pay an annual fixed payment of THB4.5 billion to TOT for the right to use the spectrum.


Latest Press Release

Fitch Affirms Standard Chartered Bank (Thai) at #A-#; Outlook Stable

Fitch Ratings has affirmed Standard Chartered Bank (Thai) Public Company Limited's (SCBT) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'A-' with a Stable Outlook. At the same time, the agency has affirmed SCBT's National...

Photo Release: KBank recognized as having the highest corporate brand value in the banking business category 2nd consecutive year

At Sukree Kaewcharoen Auditorium, the Stock Exchange of Thailand (SET), Ms. Kattiya Indaravijaya, KBank President, recently represented KBank to receive the "Thailand's Top Corporate Brand Values 2018" award in the banking business category from...

MicroBitcoin Open Source Community เซ็นสัญญากับสมาพันธ์แรงงานในเกาหลี เปิดโอกาสให้แรงงาน 1.5 ล้านคนได้ใช้เงินดิจิทัล

MicroBitcoin Open Source Community เซ็นสัญญากับสมาพันธ์แรงงาน Korea Association of Care Workers (KACW) เพื่อนำสกุลเงินดิจิทัล MicroBitcoin มาใช้ สัญญานี้ลงนามร่วมกันสามฝ่าย ได้แก่ MicroBitcoin Open Source Community, KACW และ Bluequotient...

MicroBitcoin Open Source Community Signs an Exclusive Contract with the Korea Association of Care Workers (KACW) to Expand its Usability to One and a Half Million Users

The MicroBitcoin Open Source Community has signed a contract with Korea Association of Care Workers (KACW) to adapt the MicroBitcoin blockchain network protocol. The trilateral contract was made between the MicroBitcoin Open Source Community, the Korea...

WICE establishes a joint-venture, EUROASIA TOTAL LOGISTICS, with its holding 40% of shares to provide cross-border transport services between China, Hong Kong

WICE establishes a joint-venture, "EUROASIA TOTAL LOGISTICS", with its holding 40% of shares to provide cross-border transport services between China, Hong Kong, and South East Asia with the expectation to achieve the first year's revenue at 200 million...

Related Topics