Advance Information Technology Plc (AIT) provides complete ICT solutions from product supply and applications for turnkey projects to service contracts in both the public and private sectors. Siripong Oontornpan, chairman of the executive board and president, discusses the company’s strategy and outlook.
Siripong: Stronger capital base in future
What is AIT’s business model?
AIT offers a wealth of information and communication technology (ICT) services to its customers and specialises in bringing ICT components and subsystems together to make customers’ businesses more efficient and productive. We achieve this by assessing our clients’ requirements, developing and installing solutions and providing support and maintenance. Because our business is project-based, customer support is very important, and to ensure that we are their strategic partner we have seven service centres nationwide to ensure standardised project support quality throughout Thailand.
What differentiates AIT from its competitors?
The key difference is that AIT focuses purely on our core business. Several of our competitors are business units of larger organisations with thousands of employees. We have 300 staff and consider ourselves more flexible, focused and very customer-oriented. As a result we have built a very strong reputation. Our track record can speak for itself because the focus and work ethic of the people here has been recognised by our customers.
How do you view the ICT industry in Thailand?
Technology changes constantly and rapidly, both globally and in Thailand, and our country still has a long way to go in terms of the required new network investment and maintenance. Our internet speeds are still slow, penetration rates when compared with Singapore and Malaysia are very low at 30%, and our telecom networks are still only on 3G. So there are many opportunities for Thailand to grow. The government is aware of this and is pushing for things to accelerate.
In the fourth quarter of last year AIT raised capital, offering 137 million shares at 5 baht each, totalling 685 million baht. How does the company plan to utilise the funds raised?
AIT has grown steadily in the 20 years since we started and this is the first time we raised capital since we listed on the SET 10 years ago. We had three reasons for doing so. First, we wanted to strengthen our capital base to support future growth in Thailand and the region, and with a higher capital base we can successfully bid for and manage new projects.
Second, we wanted to invest in service businesses in Thailand to increase our recurring income because currently we are reliant on projects. If Thailand has an extreme crisis, we could potentially have no work, so we want to diversify our revenue stream, hence our acquisition of KIRZ last year. KIRZ is a leader in internet-based services and operates one of the largest data centres in Thailand, with a stable, growing business and a recurring income model.
Third, we want to invest in new potential projects. We recently formed SLA Asia, a joint venture between AIT, Samart Communication Services Co Ltd and Loxley, to operate IT and communication systems and trade IT equipment in neighbouring countries. We felt that if we were to compete on a regional or global level, it would be better to have one Thai IT company versus multiple companies from Thailand competing for a project. Currently we are working on getting projects in Laos and Myanmar, and there are several opportunities for us.
We have also completed a new training centre, Train 4, which will open at Queen Sirikit National Convention Center within the first half of 2014. It will provide certified training from Cisco, and while it is not a high income generator, we view it as a knowledge base centre that is an incredibly valuable service to provide.
What are the biggest risks facing your business?
Politics is a factor as the private sector is delaying investments, and new budget approvals from the public sector have yet to be drafted or approved, and if this continues then the entire industry will be affected next year. Our backlog from last year is enough to keep us busy for the rest of this year, but this is why we decided last year that we have to diversify from being a pure project-based company to include a higher portion of recurring income from service business.
What impact will the Asean Economic Community have on your business?
We formed SLA Asia because we see opportunities in Cambodia, Laos, Myanmar and Vietnam for hardware and application services. The AEC itself will definitely benefit companies that are strong in their local markets as they will have the strength to expand regionally. However, I fear that smaller companies that lack a clearly defined niche market will suffer.
Looking at ourselves, with most of our current business from the public sector, we have already built our track record, credibility and capability and with our local market knowledge I believe it will be very difficult for non-Thai firms to be awarded public-sector work in the ICT industry.
Where do you see AIT five years from now?
The next five years will be another stage in AIT’s growth given our moves in the past year, which include a stronger capital base to take on more projects. We will continue to look for more recurring-income businesses to invest in, and SLA will expand throughout the region.
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 500 listed clients. This interview was conducted by ShareInvestor. For more information, e-mail admin.th@shareinvestor.com or visit www.shareinvestorthailand.com