Bangkok--Nov 15--TA Orange
TA Orange beats expectations; 50.8 percent top line growth year-on-year, reaches year-end subscriber target 3 months early
Broadband subscribers double, quarter-on-quarter, broadband revenue almost triples, year-on-year
TRUE revenue, cash flow, EBITDA and EBITDA margin all increase
True poised to benefit from fixed-mobile convergence
Strong TA Orange and Broadband growth beat expectations and boosted TRUE’s third quarter 2004 results.
TA Orange subscriber numbers grew strongly (up 401,330) in Q3, helping the mobile operator to reach its year-end target of 2.7 million subscribers three months early.
TA Orange proportionate revenue grew 29.7 percent compared to the last quarter and was up 50.8 percent to Bt 1.8 billion year-on-year. EBITDA grew more than 200 percent in Q3 to Bt 385 million and is now more than enough to cover interest expenses.
Broadband subscribers more than doubled to 93,845 in the third quarter - a seven-fold increase from December 2003 - and total Internet users increased to more than one million, strengthening TRUE’s position as the number one ISP in Thailand.
Consumer Broadband revenue (ADSL and Cable Modem) almost tripled year-on-year (up 195.8 percent to Bt 195 million) and was up 55.5 percent compared to the last quarter.
As a result, TRUE revenue increased 11.6 percent to Bt 7.6 billion and EBITDA grew 14.2 percent to Bt 3.2 billion in the quarter, compared with the same quarter of 2003.
TRUE revenue and EBITDA increased 6.2 percent and 4.4 percent respectively, compared to Q2, 2004. This was driven mainly by the strong growth in proportionate TA Orange revenue and product sales, while the strong growth in consumer Broadband offset a slight decline in revenue from wireline. DDN revenue increased 19.9 percent and PCT revenue increased slightly.
Excluding TA Orange, True posted a Bt 14 million net profit (including a Bt 219 million gain from non-recurring items). This was a significant improvement on the Bt 678 million loss in Q3, 2003. TRUE’s core fixed line business reported a profit from ongoing operations (Bt 10 million) for the fourth consecutive quarter and TRUE’s consolidated net loss fell further to Bt 410 million in Q3, compared with the Bt 473 million net loss in Q2, 2004.
True President and CEO Supachai Chearavanont said: “TA Orange’s strong top line growth was underpinned by synergies within the True Group and successful marketing campaigns, such as the ‘All Together Bonus’ package, which bundles TA Orange services with other True products.
“During the quarter we achieved our year-end target of 2.7 million subscribers and with an almost 40 percent share of new market additions (up from 26 percent last quarter) expect to have at least 3 million subscribers by the end of Q4, 2004.
“The completion of a long term debt facility for TA Orange during the quarter and the purchase of additional shares means TA Orange can now be fully absorbed into the True Group. This will allow TRUE to become a fully integrated operator, able to provide the full range of communications solutions in a single customized package. It will also help us realize the benefits from fixed-mobile convergence, which is the next wave of communications technology,” Mr Supachai said.
“EBITDA margin was up 95 basis points to 42.5 percent and free cash flow, excluding TA Orange, grew 18 percent to Bt 4.1 billion year-on-year, allowing True to inject Bt 4 billion into TA Orange following the completion of long term financing and pay down Bt 3.4 billion in debt, year-to-date.
“The successful negotiation of TA Orange’s long-term financing enabled TRUE to purchase an additional 39 percent shareholding in TA Orange for Bt 1, increasing TRUE’s equity stake in TA Orange to 82.86 percent at the end of September,” Mr Supachai added.
Chief Financial Officer Mr William Harris said: “As a result of the share purchase, TRUE fully consolidated TA Orange into its balance sheet for Q3, 2004, but proportionately consolidated the profit and loss statement at the previous 43.86 percent holding, as the share purchase was completed at the end of quarter.
“Because of the different accounting treatment, TRUE’s consolidated net debt to EBITDA ratio increased from 5.3 times in Q2, 2004 to 6.5 times. However, if the profit and loss statements had been fully consolidated, the net debt to EBITDA ratio in Q3, 2004 would have been lower at 5.6 times,” Mr Harris added.
“The full integration of TA Orange into the True Group will allow us to realize cost saving in the coming quarters. The new long-term debt facility will also improve TA Orange’s performance as interest expenses are expected to fall by around Bt 150 million per annum.
“Debt interest rates, all floating, have been reduced from an average of 6.2 percent to 5.75 percent currently. However, TA Orange’s depreciation and amortization will increase starting next quarter as its network is expanded, “ Mr Harris said. End.