The government's planned invocation of Section 44 of the interim charter to delay licence payments for both digital TV operators and winners of the 900-megahertz spectrum will be a boon to their financial liquidity, with True Corporation Plc and BEC World expected to reap the biggest windfall, analysts say.
The concession condition revamp will be positive for Advanced Info Service Plc (AIS) and True in terms of financial liquidity and lower costs because the interest rate of 1.5% is lower than the current financial costs of 3% for AIS and 4.8% for True, said Suwat Wattanapornprom, an analyst at Asia Plus Securities (ASP).
The National Council for Peace and Order (NCPO) and the cabinet on March 27 are scheduled to consider invoking Section 44 this month to allow digital TV operators to extend their licence payments for another three years, while the National Broadcasting and Telecommunications Commission (NBTC) also pledged to subsidise half of the rental fee for broadcasting networks for 24 months.
Section 44 will also be invoked to allow the winners of the 2015 4G mobile licence auction on the 900-megahertz spectrum to gradually pay the due date of their licence payments for the final batch, originally scheduled for 2019, in five instalments for a five-year period, but they in turn are required to pay interest based on the Bank of Thailand's policy rate of 1.5%.
AIS and True were the two winners of the 900MHz licences. The former is required to pay 59 billion baht and the latter 60 billion baht for the final instalment.
Although the payment amount remains unchanged, the new payment schedule -- which is divided into five instalments instead of the lump sum payment at one time -- will boost valuations calculated based on the discount cash flow method, Mr Suwat said.
ASP estimates that AIS's and True's valuations will be raised by 2.50 baht and 0.30 baht per share, respectively. The broker, however, will not raise its current fair value, as the additional value is not significant, Mr Suwat said.
The brokerage firm sets a fair value for AIS, the country's largest mobile phone operator by subscribers, at 230 baht and True at 6.40 baht.
AIS shares (ADVANC) closed on Friday on the Stock Exchange of Thailand at 212 baht, up five baht, while TRUE shares closed at 7.05 baht, down 10 satang.
"Share prices of both have priced in the news for a certain level," Mr Suwat said, adding that True exceeds fair value and AIS has some upside gain.
"We then recommend investors to switch from TRUE to ADVANC," he said.
Although Total Access Communication Plc (DTAC) does not see any benefit from the relaxed conditions, it's likely to gain from any mobile phone frequency auction in which it participates in the future, Mr Suwat said.
For digital TV operators, Finansia Syrus Securities said in a note that Section 44 will help improve financial liquidity and cut costs of all operators, with BEC and its three licences expected to gain the most.
BEC operates three digital TV channels (33, 28 and 13).
The aid measures are expected to boost BEC's profit by 20% and add 1.60 baht to its target share price, Finansia Syrus said.
RS Plc, Channel 8's operator, will see a profit upside of 2%, Workpoint Entertainment 3% and MCOT 1%, the brokerage said.