ADVANC: Oppday Q3/2025 บมจ. แอดวานซ์ อินโฟร์ เซอร์วิส

AIS Opportunity Day Overview

Introduction to AIS and Leadership Transition

• The presentation begins with an introduction by the host, who welcomes investors and stakeholders interested in Advance Info Service (AIS).

• A significant leadership change is announced: Patthana Rerapanang has been appointed as the new CEO of AIS, effective November 3, 2025, succeeding Somchai Lertsuriyawong upon his retirement.

• Patthana has extensive experience within AIS and has played a crucial role in strategic marketing planning and service innovation.

Q3 Financial Performance Highlights

• The third quarter of 2025 faced various external challenges, including concerns over tariff impacts on economic growth; however, consumer demand for connectivity remained strong.

• AIS's strategy focused on delivering value through entertainment content contributed to continued growth across all business segments despite market challenges.

Business Segment Growth

• Mobile business showed robust growth driven by increased internet data usage and attractive 5G package offerings.

• High-speed internet services also grew due to quality content offerings like partnerships with the English Premier League.

• Enterprise services benefited from companies' increasing need to adapt to digital transformation trends.

Revenue and Profitability Metrics

• Total revenue for the first nine months of 2025 exceeded expectations at THB 128.5 billion, marking a year-on-year increase of 6.7%.

• Net profit for Q3 reached THB 12.039 billion, reflecting a strong growth rate of 30% compared to the previous year.

Financial Ratios and Stability

• Key financial ratios improved: EBITDA margin rose to 55%, indicating effective cost management and profitability focus.

• The company's debt-to-EBITDA ratio decreased to 1.9 times, showcasing financial stability below its target threshold.

Future Outlook and Challenges

• Despite overall positive performance metrics, there were notable declines in network interconnection revenues due to expiring contracts with NT.

• Continued focus on managing operational costs will be essential for sustaining profit margins amid fluctuating revenue streams from partnerships.

This structured summary encapsulates key insights from the transcript while providing timestamps for easy reference.

AIS Financial Overview and Impact of NT Partnership

Contract with NT and Financial Implications

• AIS entered into a contract with NT for the 2,100 MHz frequency, comprising 2*15 MHz. This partnership is expected to generate approximately 2 billion THB in revenue per quarter from NT Partnership.

• The expenses associated with this partnership include depreciation costs amounting to around 900 million THB, impacting net profit by approximately 700 million THB per quarter.

Transition Period and New Contracts

• The contract with NT expired on August 3rd, leading to a transition period where AIS will incur reduced expenses due to new contracts acquired through frequency auctions. This change is anticipated to yield cost savings of about 300 million THB in Q3 and an additional benefit of 180 million THB in Q4.

Revenue Breakdown

• In terms of revenue sources, core service income constitutes about 80% of total revenue, while equipment sales account for 16%, and other revenues make up the remaining 4%. Mobile services remain the primary source at 75% of core service income.

Growth Forecast and Cost Management

• AIS expects continued growth in Q3 based on strong performance indicators from H1; however, they anticipate increased marketing costs and expenses related to ongoing mergers in Q4. They emphasize operational efficiency and leveraging economies of scale for long-term profitability enhancement.

Investment Strategy

• The investment budget remains between 26 billion to 27 billion THB aimed at strengthening network quality while focusing on mobile services alongside investments in high-speed internet and enterprise customer services. This strategy aims for optimal returns while maintaining leadership in network quality.

Business Segment Performance: Mobile Services

• In Q3, mobile service revenue grew by approximately 6.1% year-on-year, reaching around 32.8 billion THB due to an increase in quality customer segments and package value enhancements. Postpaid customers represent about 54% of mobile service revenue.

• Despite challenges like stringent identity verification processes affecting new customer acquisition, AIS managed positive net additions resulting in a total user base of approximately 46.3 million subscribers by the end of Q3, reflecting effective customer management strategies.

Data Usage Trends

• Data usage among customers has shown consistent growth; average monthly data consumption reached approximately 33 GB per subscriber—a rise of about 11% compared to last year—indicating increasing reliance on mobile data services among users during Q3.

High-Speed Internet Service Growth

• High-speed internet services generated revenues totaling around 8.19 billion THB—a growth rate of roughly10% year-on-year—driven by both an expanding user base and enhanced service offerings targeting quality customers.

Corporate Customer Services Expansion

• Revenue from corporate customer services also saw double-digit growth at around14%, reaching over2 billionTHB as AIS continues its focus on enhancing business solutions tailored for enterprise clients.

Infrastructure Service Demand and 5G Ecosystem

Overview of Infrastructure Services

• The demand for infrastructure services, particularly Enterprise Data Services and cloud services, is growing robustly as part of the key products offered by ARS.

• The first axis focuses on building a 5G ecosystem that enhances expertise in connectivity and digital infrastructure, marking a significant step towards digital transformation for organizations.

Network, Cloud, and Data Center

• The second axis involves Network and Cloud services along with Data Centers to facilitate data processing and storage opportunities for clients.

• The third axis emphasizes improving data analysis efficiency through AI or Data Analytics.

Integration and Industry Transformation

• The fourth axis integrates the first three axes to ensure comprehensive functionality.

• The fifth axis focuses on Industry Transformation, presenting various AIS offerings to meet diverse service demands.

Sales Growth in Device Business

Device Sales Performance

• Sales from devices and SIM cards have grown by 8.7% compared to the previous year, reaching 8.9 billion baht due to strategies enhancing retail experiences.

• Profit margins in Q3 stood at 5.0%, gradually increasing alongside focused sales strategies aimed at profitability.

Digital Business Initiatives

Enhancements in Digital Services

• AIS continues to elevate its AIS Play platform as a comprehensive entertainment hub offering diverse content catering to both local and international audiences.

• Exclusive partnerships have led to the addition of business news channels like Bloomberg Television and Fox Business within the Play Family package starting at 119 baht per month.

Investment in Digital Banking

Virtual Bank Collaboration

• AIS has invested in a virtual bank named Click Bank through a joint venture with two partners, holding a 39% stake while KTB holds 41% and PTTOR holds 20%.

• A new company named Thai Trinity Holding has been established as the main shareholder of this virtual bank, with services expected to launch in H1 next year.

Data Center & Cloud Investments

Partnerships for Data Center Development

• ARS collaborates with Singtel and GRAFFIS for data center operations; AIS holds a 25% stake while Singtel has 35% and GRAFFIS has 40%.

• GSA Data Center's first phase is operational while further investments are ongoing; GRAFFIS specializes in clean energy solutions essential for continuous data center operations.

Cloud Service Expansion

• A partnership with GRAFFIS has led to establishing GIS as a cloud aggregator providing Oracle Cloud services along with Google Cloud offerings tailored for enterprise customers.

Financial Management Insights

Cost Management Strategies

• Net debt-to-Ebitda ratio decreased to 1.99 times; liabilities reduced due to lower frequency costs while interest-bearing debts remained stable.

Cash Flow Strength

• Continuous growth observed in operating cash flow (OCF), maintaining strong free cash flow levels alongside an increase in return on average capital (ROAC).

Summary of Financial Performance

Strong Growth Trajectory

• Overall performance remains robust following AIS's strategic focus on strengthening business foundations while exploring new growth opportunities across connectivity sectors.

AIS Business Update and Sustainability Initiatives

Overview of AIS's Business Growth

• AIS continues to grow through effective management and disciplined financial practices, ensuring sustainable returns in terms of dividends and ongoing growth.

Key Strategies for Sustainability

• The core sustainability strategy at AIS focuses on three main pillars:

• Digital Economy: Expanding telecommunications networks to foster digital innovation.

• Digital Accessibility: Ensuring everyone in society has access to digital technology to reduce social inequality.

• Climate Action: Committing to environmental sustainability through efficient energy use and proper electronic waste management.

Project Updates

• Introduction of Project 1185, aimed at enhancing user experience by allowing customers to report fraudulent SMS messages easily. Users can capture screenshots and send them to the designated number for verification within 24 hours.

Safety Initiatives

• Collaboration with the Metropolitan Police Bureau launched the Emergency Location Service (191 ELS), which automatically identifies emergency callers' locations, improving response times without requiring additional apps for Android users on the AIS network.

Regional Projects

• Partnership with Singtel on a project raising awareness about improper electronic waste disposal. Over 2,700 collection points have been established nationwide for responsible e-waste disposal.

Investment Opportunities

• Announcement of AIS's first bond issuance in 2023, offering various bonds tailored for institutional clients with a fixed interest rate of 2.29% over seven years available for public subscription from November 10-12.

Financial Stability Indicators

• The bond rating is Triple A from Fitch Thailand, reflecting strong business performance and financial stability. Five leading financial institutions are appointed as underwriters for this bond issue.

Future Directions Under New Leadership

• Discussion on potential changes under new CEO leadership while maintaining focus on connectivity services such as mobile and broadband. Plans include strengthening retail, entertainment, and enterprise sectors while prioritizing profitability in decision-making processes.

Economic Outlook

• Anticipation of increased momentum in Q4 due to seasonal trends and government stimulus measures encouraging consumer spending. Positive impacts expected from enhanced entertainment offerings contributing significantly to revenue growth.

Performance Metrics

• Current year-to-date service revenue growth stands at approximately 6.7%, exceeding initial guidance expectations; EBITDA also shows positive growth trends indicating robust operational performance moving forward.

Economic Guidance and Investment Strategies

Adjustments in Economic Guidance

• The speaker discusses the economic outlook from the previous year, noting a shift in perspective that led to an adjustment of guidance from 3-5% to a more optimistic forecast for the current period.

• There is an emphasis on investment plans, with over 16 billion baht already utilized. The focus remains on mobile business investments and broadband services.

Integration and IT Developments

• Plans for IT integration are highlighted, aiming for completion next year. This will enable a unified operating system to enhance customer service efficiency.

• Data usage per customer has increased significantly, averaging 33 GB this year compared to 30 GB last year, indicating a trend towards higher data consumption.

Customer Growth and Network Quality

• The discussion addresses how continuous investment is necessary despite rising costs associated with increasing data consumption. Transitioning customers to 5G is seen as a way to improve operational efficiency.

• Investments will be accelerated in network quality during the second half of the year to manage potential congestion due to increased customer usage.

Seasonal Expenses and Market Impact

• Anticipated increases in Q4 expenses include marketing and content costs aligned with business expansion while maintaining guidance estimates.

• The introduction of promotional measures aims to stimulate data adoption among new users, enhancing overall data consumption within mobile services.

Data Center Expansion Plans

• Current capacity at GSA is around 80-90%, with plans not to reach full capacity immediately due to anticipated growth in existing customer demand.

• Future developments include constructing additional data centers under GSA's joint venture model, targeting significant growth over the next few years.

Retail Promotions and Customer Engagement

• Retail strategies involve offering discounts on mobile packages (699/799), ensuring existing customers benefit without needing upgrades.

• Personalized promotions are being developed based on individual customer statuses within various package tiers, enhancing engagement through tailored offers.

Trade-In Programs and New Device Offers

• Trade-in programs are discussed as effective methods for attracting new customers by allowing them to exchange old devices for newer models like iPhone 17 through partnerships.

iPhone Q4 Momentum and Apple Strategy

iPhone Performance Insights

• The branch can provide precise answers regarding the momentum of the new iPhone in Q4, comparing year-on-year performance and percentage growth.

• Apple's revenue for September showed a 16% year-on-year increase, indicating strong market reception for the iPhone 17.

Product Design and Customer Engagement

• The new design maintains the same starting price while improving specifications, appealing to customers who frequently upgrade their devices.

• Apple’s expanding ecosystem is attracting more customers who are likely to switch devices regularly.

Retail Strategy Enhancements

• Focus on renovating flagship stores and enhancing customer service through specialized staff (AS Pro) knowledgeable about Apple products.

• Introduction of house brands in financial services allows customers to purchase accessories conveniently alongside their devices.

Supply Chain Management Improvements

• Enhanced inventory management and supply chain strategies aim to address stock shortages at various locations effectively.

Closing Remarks

• Appreciation expressed towards attendees for their interest, with an invitation to reconnect in the next quarter.