Fitch Ratings: Spectrum Payments, Slow Growth Weigh on Thai Telcos

Stocks and Financial Services Press Releases Tuesday December 3, 2019 12:01
Bangkok--3 Dec--Fitch Ratings
Link to Fitch Ratings' Report(s): Spotlight: Thai Telecom Sector

Leverage metrics for Thai telecom operators will weaken in 2020, Fitch Ratings says in a new report. Sector free cash flow is likely to turn negative as slow growth in cash flow from operations is unlikely to cover a surge in capex and spectrum payments. Weak data monetisation and a maturing mobile market will put pressure on revenue growth and earnings recovery.

We expect the mean net debt/EBITDA to increase to around 2.1x in 2020 (2019F: 1.8x) for the three largest mobile operators - Advanced Info Service Public Company Limited (BBB+/AA+(tha)/Stable), Total Access Communication Public Company Limited (BBB/AA(tha)/Negative), and the mobile unit of True Corporation Public Company Limited.

Fitch expects operators will focus more on improving profitability and balance sheets to preserve cash flow for a progressive 5G rollout. The existing 4G network is likely to remain the dominant technology in Thailand to cater for data demand in the next few years.

Competitive intensity should ease towards 2020, as negative free cash flow prevents excessive competition and the likelihood of telcos behaving rationally during a high capex cycle. Nevertheless, Fitch expects the sector's revenue growth will remain weak in 2020 (9M19: 2.5%). We expect Thai mobile phone operators will face greater challenges on improving data monetisation as the market is approaching saturation. The growth in data subscriptions and data traffic has started to decelerate on higher 4G device penetration over the past few quarters.

The full report, " Spotlight: Thai Telecom Sector", is available on or by clicking on the link in this release.

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