Efficiency measures continue to help deliver a healthy EBITDA margin despite slow macroeconomic recovery

21 October 2022Total Access Communication PLC., or dtac, reported ongoing growth momentum in subscriber acquisition driven by improved customer experience due to focused network expansion. As a result of strategic focus on efficiency, the company continued to deliver a solid EBITDA margin in Q3 2022 amidst macroeconomic pressure driven by inflation.

Sharad Mehrotra, dtac’s Chief Executive Officer, said, “During the third quarter of 2022, Thailand continued to witness slow macroeconomic recovery amidst various external challenges. The country is witnessing ongoing growth in tourists and migrants, however, higher inflation rates are resulting in increasing costs and reduced spending capability of consumers. The competition in the telecom sector continued to remain fierce in the third quarter. Despite such external challenges, dtac continues to remain focused on strategic priorities to deliver value for customers.

Having achieved the ambition to expand 5G coverage to 77 provinces in 1H22, dtac focused on enhancing the experience for customers through continued rollout of 5G sites, adding ~0.6K new sites in Q322. Deployment on low-band continued with an additional 1.0K new sites, reaching approximately 18,800 on the 700 MHz. Net Promoted Score further improved from last quarter while network complaints continued to decline. dtac added 775,000 new subscribers in Q322.

At the end of the third quarter of 2022, total subscriber base stood at 21.1 million, an increase of 3.8% QoQ. Service revenue (excluding interconnection charges) remained flat QoQ while declining by 0.3% YoY due to ARPU erosion. EBITDA for Q322 amounted to THB 7,177 million, declining by 13.4% QoQ and 3.6% YoY. EBITDA margin (normalized) remained healthy at 43.8% in Q322. Net profit for the third quarter of 2022 amounted to THB 488 million.

Nakul Sehgal, dtac’s Chief Financial Officer, said, “dtac’s strategic priority as a customer-centric challenger continues with B2B and dtac beyond as key pillars. Solution sales provided to the SME segments gained popularity and sold 2.5K times higher licenses QoQ while dtac entered strategic partnerships to ensure revenue growth ambition. During the first nine months of 2022, service revenue from B2B grew by 14% YoY. Dtac beyond continued positive traction on growth and engagement driven by 28% YoY higher active digital users. During the first nine months, revenue from dtac beyond grew by 16% YoY. Focus on efficiency measures have helped dtac achieve 6.2% reduction in OPEX in the first nine months of 2022. Normalized for one-offs during the periods, OPEX reduced by 3.1% from last year in addition to additional cash savings during the quarter.

EBITDA for Q322 declined by 13.4% QoQ due to positive impact from one-offs in the previous quarter. EBITDA declined by 3.6% YoY. Driven by strategic focus on efficiency initiatives, normalized EBTIDA remained flat YoY despite higher inflation, macroeconomic pressure and negative one-offs related to amalgamation costs. Net profit for the third quarter declined QoQ due to positive effect from one-offs in Q222, amalgamation related costs in Q322 and regulatory cost benefit in 2021. Net profit for Q322 includes partial settlement of insurance claim of THB 170 Mn, offset by higher depreciation and amortization because of network expansion. CAPEX for the quarter stood at THB 1,954 Mn.”

Dtac expects to maintain its guidance for 2022 as previously communicated, with service revenue (excluding IC) to be between flat to low single digit decline and EBITDA to be between flat to low single-digit growth. Capital expenditure levels are expected to be between THB 11-13 billion.

Key financial indicators in Q322 (post-TFRS 15 & 16)

  • Service revenue excluding IC – THB 13,930 million, improving by 0.1% QoQ while declining by 0.3% YoY
  • EBITDA – THB 7,177 million, declining by 13.4% QoQ and 3.6% YoY
  • EBITDA margin (normalized) – 43.8%
  • Net profit – THB 488 million