TRUE: Oppday Q3/2025 บมจ. ทรู คอร์ปอเรชั่น

Q3 2025 Financial Results Presentation

Introduction

• Lauren, head of industrial relations at Blue Corporation, welcomes attendees to the Q3 2025 results presentation.

• Co-CFO Kunak is introduced to present financial highlights.

Transformation and Modernization Goals

• Kunak discusses ongoing transformation efforts aimed at enhancing customer experience and simplifying product offerings.

• The company aims to strengthen core connectivity services while focusing on shareholder ecosystems involving CP Group and Telenor.

• Emphasis on creating a flatter, more agile organization supported by agentic AI to navigate challenges.

Financial Performance Overview

• Synergies from integration are nearing completion after two and a half years of effort; financial discipline remains crucial.

• Despite macroeconomic headwinds, guidance for 2025 remains steady: service revenue growth of 0% to 1% and EBITDA growth of 7% to 8%.

• Commitment to midterm guidance includes debt reduction and shareholder rewards; an interim dividend has been declared.

Network Modernization Achievements

• Q3 2025 marks a milestone in integration with modernization of over 18,500 network sites.

• Year-on-year growth in EBITDA reported at 8%, with significant improvements in service revenue totaling THB 41.3 billion.

Coverage Improvements

• Notable increase in site access for customers: True customers gained access to an additional 8,000 sites; DTAC customers gained an additional 18,000 sites.

• Enhanced coverage leads to a reported improvement in speed (23% increase on 5G), achieving up to 94% nationwide coverage for data customers.

Spectrum Portfolio Enhancements

• Rich spectrum portfolio now includes new additions that enhance customer experience; unique positioning allows dedicated use of certain frequencies for optimal performance.

Financial Highlights Summary

• Service revenue shows a decline year-on-year but slight growth quarter-on-quarter; EBITDA increased by nearly 8%.

• Net profit after tax reported at THB 1.6 billion; normalized profit stands at THB 4.6 billion after accounting for write-offs.

Financial Overview and Spectrum Acquisition Insights

Proposed Payout and Profit Analysis

• The proposed payout is 6.6 billion, translating to 0.19 satang per share, which represents a 125% payout of the nine-month profit.

Spectrum Acquisition Benefits

• True acquired spectrum in an auction on June 29 for 26.4 billion over 15 years, covering both 2300 MHz and 1500 MHz bands. This acquisition brings benefits due to the expiration of previous contracts with NT.

• The contract with NT expired on August 3, allowing for two months of benefits in Q3 from this expiry and enabling asset transfers related to the 850 MHz band to DI.

Financial Impact from Contract Expiry

• The EBA benefit from the contract expiry with NT amounts to 7.1 billion, while asset capitalization transferred to DI totals approximately 3 billion, leading to a net impact of about 10.1 billion over a year.

• Amortization related to new spectrum acquisition is projected at around 1.8 billion; thus, the net profit impact will be approximately 5.3 billion on a yearly basis after accounting for these factors.

Service Revenue Performance

• Year-on-year service revenue improved when normalizing for prior network incidents and lower domestic roaming revenue from NT; reported service revenue increased by 5% quarter-on-quarter driven mainly by broadband and TV segments growth.

• Mobile revenue declined by about 4% quarter-on-quarter primarily due to lower contributions from postpaid services affected by previous network outages; however, if normalized for these incidents, mobile revenue remained flat year-on-year.

Subscriber Trends and Regulatory Changes

• Subscriber churn was notably impacted by network outages recognized in Q3 due to definitions based on active users within a rolling period; overall subscribers saw a decline of approximately 4.8% year-on-year amid regulatory changes requiring biometric registration for customers that also hindered growth efforts.

Operational Expenditure (Opex) Insights

• Opex experienced a significant decline of about 21.6% year-on-year attributed largely to spectrum acquisition benefits; regulatory costs decreased by roughly 8.5%, reflecting adjustments made earlier in the year alongside modernization efforts reducing operational costs through tower reductions and enhanced network efficiency strategies.

Financial Overview and Q&A Session

Cost Analysis and Operational Performance

• The cost of sales has risen alongside product sales, particularly iPhones. SG&A expenses decreased by 6.2% year-on-year due to organizational modernization and commercial synergy, but increased by 2.8% quarter-on-quarter due to higher bank debt.

• Spectrum rental costs have significantly dropped by 72.2% year-on-year following the expiration of an arrangement with NT on August 3rd, leading to a further decline expected in Q4.

• Overall operating expenses (excluding DNA) fell by 17.7% quarter-on-quarter, while EBITDA improved nearly 8%, primarily driven by benefits from spectrum acquisition.

• EBIT margin out of service revenue rose to 65.3%, marking a year-on-year improvement of 5.1 percentage points and a quarter-on-quarter increase of 4.5 percentage points.

• Net profit for Q3 was reported at $1.66 billion, adjusted for one-time effects related to asset write-offs totaling $3 billion due to network modernization and impairment of assets.

Financial Metrics and Capital Expenditure

• Financial costs decreased by 8.9% compared to the previous year; however, depreciation and amortization rose by 7.7% quarter-on-quarter due to new spectrum acquisitions.

• Capex for Q3 reached $6.9 billion, contributing to a total of $19.6 billion over nine months in 2025; capex-to-sales ratio stood at 15%.

• Net debt increased due to higher lease liabilities after transferring assets to DIP; as of September 30th, lease liabilities totaled $25.1 billion.

Revenue Trends and Dividend Declaration

• Total revenue declined by 3.3%, while service revenue saw a slight decrease of only 0.2%. Operating expenses dropped significantly by approximately 11%.

• A dividend declaration amounting to $6.6 billion was announced for the first nine months of fiscal year 2025, representing a payout ratio of 125%. The record date is set for November 18th with payouts on December 3rd.

Future Guidance and Growth Strategy

• The company revised its dividend policy aiming for no less than a payout ratio of 50% based on consolidated net profit with semiannual payments planned moving forward.

• In response to questions about ARPU trends in Q4, management indicated that they cannot provide specific guidance yet but expect seasonal improvements due to tourism and government subsidies.

• Despite recent negative subscriber trends, there is optimism for positive growth in Q4 based on historical patterns during this period.

• For future investments, the company plans significant capital expenditure exceeding $10 billion in Q4 as part of their strategy aimed at achieving growth expectations moving into next fiscal years.

Future Capital Expenditure and Operational Efficiency

Midterm Guidance on Capex to Sales

• The company has provided midterm guidance indicating that the capex to sales ratio is expected to decrease to 13-14% by 2027, down from approximately 16% in 2025.

• Current trends suggest a focus on optimizing capital expenditures while maintaining revenue growth, excluding netbook rental revenues from total sales figures.

SG&A and OPEX Management

• Significant reductions in Selling, General & Administrative (SG&A) expenses have been achieved, dropping from over $8 billion post-amalgamation to about $5.1 billion in Q3 of 2025—a reduction of more than 35%.

• The current SG&A figure represents a steady state with no major one-off effects influencing this reduction; future efforts will continue focusing on operational efficiency.

Future Operational Goals

• The ambition is for Financial Before Depreciation and Amortization (FBDA) growth to outpace revenue growth, aiming for an increase in FBDA margins above the current level of 65%.

• Plans include leveraging artificial intelligence (AI) to enhance efficiency through automation of work processes, contributing towards building a world-class organization. Examples of AI applications may be shared later.

Selling Expenses and Revenue Growth

• As top-line revenue grows, selling expenses are also expected to rise; however, unit expenditure per gross set should decrease despite increased volume. This reflects a strategic approach towards cost management amidst growth.

• The goal is for service revenue growth to exceed OPEX increases, aligning with the company's midterm guidance targeting an EID margin increase from 65.3% currently to 67% by 2027.

Dividend Policy Rationale

Explanation for High Dividend Payout

• The decision to declare a dividend payout of 125%, despite high company debt levels, was influenced by the need to reward shareholders after ten quarters focused on synergy realization post-amalgamation. This marks the first interim dividend since then.

• While reported profits appear impacted by one-time write-offs related to network modernization, normalizing these figures shows that the dividend aligns with their policy of distributing at least 50% of net profit on a consolidated basis—resulting in a normalized payout percentage of approximately 50.3%.

Dividend Policy and Subscriber Trends

Dividend Strategy

• The company plans to pay dividends twice a year, with the upcoming dividend for 2025 based on fourth-quarter results, pending shareholder approval at the next AGM.

• The management emphasizes balancing debt repayments with rewarding equity shareholders, aiming for progressively increasing dividends in the future.

Subscriber Decline Analysis

• A decline in subscribers is attributed to efforts to reduce high churn rates by focusing on quality acquisitions and adjusting lower-priced offers.

• External factors such as a 7-8% decrease in tourist inflow in Thailand have also contributed to this decline.

• A network outage incident from May impacted subscriber churn recognized in the third quarter due to a 90-day definition of subscribers.

Regulatory Changes Impacting Subscribers

• New regulations requiring liveliness detection tests during biometric registration have further affected subscriber numbers.

• Management anticipates a turnaround in subscriber trends by the fourth quarter.

Post-Merger Synergy and Financial Discipline

Synergy Realization Progress

• The synergy realization process is nearing completion, with only about 200 sites left for modernization expected to be booked in Q4.

• Significant efficiencies have been achieved, including over 35% reduction in SG&A expenses due to synergies from integration work.

Financial Management Insights

• The company maintains financial discipline as foundational for performance management, projecting an overall margin of approximately 67% by 2027.

Trends in Subscription Television Business

Declining Linear Business

• The subscription television business has seen a year-on-year decline of 13.5%, primarily driven by decreasing linear subscriptions which are expected to continue declining.

EPL Revenue Impact

• The absence of English Premier League (EPL) revenues has exacerbated declines; however, costs associated with EPL were higher than revenues generated from it.

Investment into Content

• Savings from not having EPL are being reinvested into acquiring diverse content aimed at retaining customers and generating additional revenue streams.

Spectrum Portfolio and Upcoming Auctions

Overview of Spectrum Portfolio

• The speaker emphasizes the richness of their spectrum portfolio, indicating that it effectively meets customer needs.

• There is a mention of the 2100 MHz spectrum set to expire towards the end of 2027, highlighting its significance in future planning.

Future Auction Expectations

• An auction for at least the 2100 MHz spectrum is anticipated to occur before its expiration date.

• The discussion indicates a proactive approach to managing spectrum resources and preparing for upcoming regulatory changes.

Conclusion of Call

• The call concludes with no further questions regarding third-quarter performance, suggesting a wrap-up after addressing key topics.