Bangkok--Aug 15--True Corporation
True Corporation PLC (SET:TRUE) reported declining second quarter performance due to a fall in revenue in its mobile subsidiary TA Orange. True expects weakness to continue through to the fourth quarter when low-tariff price plans offered in the second quarter expire in December. TA Orange is now expected to breakeven in Q1, 2006 — one quarter later than planned.
True President and CEO Supachai Chearavanont said the result was driven by a combination of factors, including the impact of a short period of intense price competition in the cellular market, a tightening in supply of mobile phone numbers, signal congestion at links to other networks and lower overall cellular market growth due in part to a slowing Thai economy.
True consolidated service revenue declined 5.9 percent in the second quarter to Bt 10.3 bn, with consolidated EBITDA down 14.2 percent Q-on-Q to Bt 3.8 bn, but up 23 percent compared to the second quarter in 2004 with full consolidation of TA Orange since Q4, 2004. True reported a net loss of Bt 964 mn for the quarter, including foreign exchange losses.
Non-TA Orange revenue and EBITDA improved slightly to Bt 6.1 bn and Bt 2.8 bn, up 2.7 and 1 percent respectively over the first quarter. The core fixed line business posted its seventh consecutive quarterly profit from ongoing operations.
TA Orange’s revenue contribution in Q2 declined by 10.9 percent Q-on-Q to Bt 4.8 bn, but increased 320 percent Y-on-Y. TA Orange’s subscriber base grew 682,782 or 20 percent during the first half of 2005 to 4.06 mn in June, 2005, with market share increasing from 12.8 percent to 14.4 percent. During the second quarter, TA Orange took a 19 percent share of subscriber net ads (144,984), compared with 45 percent (537,798) in Q1, retaining a 35 percent share for the first half of the year, in line with plan.
“TA Orange has proven there is a clear place for an aggressive competitor offering consumers best value for money,” said Mr Chearavanont. “Going forward, we expect TA Orange to win one third of new subscribers in the second half of the year, and to reach its year end target of 4.2 million subscribers earlier than planned.
“The recovery in TA Orange performance will be driven by higher call traffic following ongoing network expansion and reduced signal congestion, and a growing revenue contribution from non-voice services.”
Consumer Broadband revenue more than tripled during the first half of 2005 to Bt 911 mn, with subscribers increasing 50 percent (80,207) during the same period. With 244,982 subscribers at the end of June, True holds more than 80 percent of the broadband market. During the second quarter, revenue increased 7.6 percent (Q-on-Q) to Bt 472 mn, with strong net subscriber growth (36,394).
Growth in Consumer Broadband continued to offset the declines in fixed line revenue (down 2.7 percent Q-on-Q to Bt 3.7 bn). Fixed line turned around a loss of subscribers in the first quarter, adding 51,366 subscribers in Q2 following the success of bundling the service with dial-up and broadband Internet.
The success of its Bt 3 per call promotional campaign helped WE PCT continue its turnaround, with revenue increasing 50 percent (Q-on-Q) to Bt 770 million, driven by new handset sales and a 12.1 percent increase in service revenue.
Chief Financial Officer Mr William Harris said True continued to reduce debt, with repayment of Bt 1.8 bn during the first half of the year, including a gain from pre-payment of Deferred Payment Notes. As a result, the net debt to EBITDA ratio reduced to 4.6 times, from 6.0 times at year end 2004.
“True finished the quarter with a Bt 9.2 bn in cash and short term investment, including Bt 5.0 bn at TA Orange. TA Orange has sufficient cash to fund Capex for network expansion in the second half of the year. End.