TRUE REPORTS SOFT QUARTERLY RESULTS BUT STRONG CONVERGENCE PERFORMANCE CONTINUES, SECOND-HALF IMPROVEMENT EXPECTED

Information Technology Press Releases Tuesday August 17, 2010 08:08
Bangkok--17 Aug--PR FOCUS

Reporting its performance for the three months to June 30, 2010, True Corporation PLC (SET: True) posted soft results mainly on weaker performance at TrueMove due to the impact of the challenging olitical climate and seasonality. Revenue at TrueOnline continued to exhibit low single-digit growth Y-on-Y, while it bottomed-out at TrueVisions on rising advertising revenue. Convergence remained strong and a second-half improvement in overall performance is expected.

Consolidated Q2 service revenue excluding interconnection charges (IC) remained relatively stable, down just 0.4% to Bt 12.7 billion Y-on-Y, while falling 4.6% Q-on-Q. EBITDA was Bt 4.5 billion, down 10% Q-on-Q mainly on challenging political conditions, weaker tourism which affected International Roaming (IR) and seasonality. Net Income from Ongoing Operations (NIOGO) excluding deferred income tax was Bt 89 million.

Despite the challenging political climate in Q2, the True Convergence Index of households using two or more True services rose 14.1% Y-on-Y to 2.4 million. Broadband posted its highest net adds (33,000) for three years, with the first-half total (60,000-plus) surpassing the full-year results for 2009. Performance bottomed out at TrueVisions where revenue increased 2.4% Y-on-Y on the back of surging advertising revenue, which grew 32.7% over 1Q10. Meanwhile, TrueMove’s non-voice services remained strong with 19.9% growth in revenue over the past year.

True President and CEO Suphachai Chearavanont said, “Our performance was affected by the challenging political situation in Q2, which is also our low season. Despite the second quarter’s softer results, a number of factors make us confident of a stronger second half.”

“Signs of recovery emerged at TrueMove in July. Coverage of the new Premier League season, new reality shows, HDTV and rising advertising revenue will improve performance at TrueVisions in the second half. Broadband promotions and provincial expansion will increase revenue and subscribers at TrueOnline. Meanwhile convergence will also continue to rise, supporting growth across all businesses,” said Mr Suphachai.

“The commercial launch of 3G is widely anticipated after the publication of 3G regulations in July. True’s rich content and convergence platform will strengthen its 3G positioning.”

Comparing 1H10 to 1H09, service revenue excluding IC edged up 0.4% to Bt 26 billion on moderate growth in all businesses. Meanwhile, TrueMove’s service revenue excluding IC increased 2.7% during the period.

At TrueMove, Q2 revenue excluding IC rose 1.1% Y-on-Y to Bt 5.7 billion due to an increase in postpaid revenue driven by non-voice growth. Revenue declined 7.5% Q-on-Q on softer prepaid revenues due to competition within on-net promotions, seasonality and the political climate. The latter two factors also weighed on International Roaming (IR) revenue. Total net adds were 180,403 in Q2, with a total subscriber base of 16.4 million. Postpaid revenue grew 10.6% Y-on-Y on the rising popularity of smartphones and mobile Internet, supporting an increase in non-voice revenue of 19.9%. The positive IC trend continued with a net gain of Bt 60 million.

Service revenue at TrueOnline was Bt 6.6 billion, up 2.4% Y-on-Y on strong performance in Broadband, new business and convergence, though it softened 1.8% Q-on-Q on seasonality. Broadband revenue rose 7.6% Y-on-Y and 9.1% in the first half. Successful promotions saw total subscriptions top 750,700. Q2 also saw the launch of Thailand’s fastest Internet service (50 Mbps).

Performance at TrueVisions bottomed out in Q2 with service revenue rising 2.4% Y-on-Y to

Bt 2.3 billion. The 32.7% Q-on-Q rise in advertising revenue helped offset the effect of the end Premier League football coverage in May. However, the impact of domestic politics, competition and seasonality caused a 0.4% dip Q-on-Q. Net adds increased to 22,000 in Q2, mainly on coverage of the 2010 FIFA World Cup, widening the subscriber base to 1.7 million. TrueVisions’ launch of Thailand’s only HDTV channels received a strong market response. Mass market campaigns implemented in Q2 will support future subscriber growth and advertising revenue.

A Bt 12-billion refinancing at TrueVisions in June lowered the cost of borrowing, brought repayments in line with the company’s cash flow and eliminated foreign exchange risk, helping to improve the firm’s credit profile.

True Group continued to focus on deleveraging with the repayment of Bt 2.7 billion of long-term debt in the first half. The Group’s net debt-to-EBITDA ratio increased slightly to 3.2 times in Q2, as EBITDA declined due to the impact of political unrest and seasonality.

True Group CFO Noppadol Dej-Udom said, “The completion of the refinancing of TrueVisions represents a key milestone for the Group which follows on from the refinancing of TrueOnline last year. This was made possible by leveraging liquidity in the local market. Going forward, we will continue to deleverage and improve our credit profile.”


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