DTAC looks ahead after B4.4bn blow from CAT settlement

DTAC looks ahead after B4.4bn blow from CAT settlement

Total Access Communication (DTAC) lost 4.4 billion baht in revenue in 2018 because of the 9.5-billion-baht legal settlement it was required to pay to state-owned CAT Telecom.

Service revenue excluding the interconnection charge for fiscal 2018 declined by 2.8%, while earnings before interest, tax, depreciation and amortisation (ebitda) margin and capital expenditure stood at 37.9% and 19.5 billion baht, respectively.

The decline in service revenue was driven by uncertainty surrounding the transition out of the concession regime, lower international direct dialling service revenue, the clean-up of CPA services to improve customers' experience and a lower number of tourist arrivals.

Ebitda (before other items) declined by 6.7%, mainly from higher network operating expenses from network expansion and a change in cost structure after the end of the concession, the temporary cost to cover the remedy, and the cost of the tower and network infrastructure lease from CAT, which was partly offset by a decline in selling, marketing and general administrative expenses.

Operating cash flow (ebitda minus capital spending) was 8.9 billion baht after a huge network investment. The ratio of net debt to ebitda was 1.2, and cash on hand was 14.1 billion baht.

DTAC plans capital expenditure of 13-15 billion baht in 2019.

"DTAC's cost structure changed significantly after the end of the concession, one of which was temporary -- the cost of the remedy during Sept 16 to Dec 15, 2018," said DTAC chief financial officer Dilip Pal.

"Regulatory costs dropped sharply due to the cessation of the revenue share payable to CAT," he said. "In addition, the roaming cost on TOT's 2300-megahertz network and expenses for the lease of CAT's towers and network infrastructure commenced in April and September 2018, respectively."

At the end of 2018, DTAC's total subscriber base stood at 21.2 million, all registered under DTN, a subsidiary holding the 2100MHz, 1800MHz and 900MHz licences.

The expansion of the DTAC Turbo network was well ahead of target, with 12,700 base stations installed by the end of 2018. Improved density for the 2100MHz network continued to add more coverage and capacity, with overall network coverage standing at 94% of the total population.

With the partnership with TOT for 2300MHz wireless service, the acquisition of 1800MHz and 900MHz spectrum from the auctions in 2018, and the existing 2100MHz spectrum, DTAC lays claim to a strong and competitive spectrum portfolio, with the largest downlink bandwidth in the market.

DTAC made high-level network investments to expand network coverage and capacity in the 2100MHz and 2300MHz spectra.

The company said legal risks pertaining to the concession agreement were greatly reduced by the dispute settlement agreement, which is subject to approval at the annual general meeting on April 4.

"With the concession regime behind us and a historic year of network investment to expand coverage and capacity on both 2100MHz and 2300MHz networks, we have built a good foundation for future growth and have aim to return to growth during 2019, with continued focus on operational efficiency," said DTAC chief executive Alexandra Reich.

"We will keep improving the network and customers' experience to rebuild confidence in DTAC's brand," she said.

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