Edited Transcript of ADVANC.BK earnings conference call or presentation 9-Aug-22 1:30am GMT

Q2 2022 Advanced Info Service PCL Earnings Call Phayathai Dec 7, 2022 (Thomson StreetEvents) -- Edited Transcript of Advanced Info Service PCL earnings conference call or presentation Tuesday, August 9, 2022 at 1:30:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Nattiya Poapongsakorn Advanced Info Service Public Company Limited - Head of IR & Compliance Department * Pratthana Leelapanang Advanced Info Service Public Company Limited - Chief Consumer Business Officer * Seow Eng Goh Advanced Info Service Public Company Limited - President & COO * Somchai Lertsutiwong Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director * Tee Seeumpornroj Advanced Info Service Public Company Limited - Chief Finance Officer ================================================================================ Conference Call Participants ================================================================================ * Arthur Pineda Citigroup Inc., Research Division - Director and Head of Pan-Asian Telecommunications Research * Hussaini Saifee UBS Investment Bank, Research Division - Analyst * Pisut Ngamvijitvong * Thapana Phanich TISCO Securities Co. Ltd., Research Division - Research Analyst * Thitithep Nophaket Kiatnakin Phatra Securities Public Company Limited, Research Division - Director & Analyst * Wasu Mattanapotchanart Maybank Research Pte. Ltd. - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [1] -------------------------------------------------------------------------------- Good morning, everyone. Welcome to AIS Second Quarter Result Conference Call. First, let me introduce management with us today. First, our CEO, Khun Somchai. -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [2] -------------------------------------------------------------------------------- Good morning. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [3] -------------------------------------------------------------------------------- Our Chief Operating Officer, Mr. Goh Seow Eng. -------------------------------------------------------------------------------- Seow Eng Goh, Advanced Info Service Public Company Limited - President & COO [4] -------------------------------------------------------------------------------- Good morning. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [5] -------------------------------------------------------------------------------- Our Chief Consumer Business Officer, Khun Pratthana. -------------------------------------------------------------------------------- Pratthana Leelapanang, Advanced Info Service Public Company Limited - Chief Consumer Business Officer [6] -------------------------------------------------------------------------------- (foreign language) -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [7] -------------------------------------------------------------------------------- And Chief -- our CFO, Khun Tee. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [8] -------------------------------------------------------------------------------- Good morning. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [9] -------------------------------------------------------------------------------- And myself, Head of IR, Nattiya. As usual, I will begin with the short brief and then we'll go to Q&A. At this time, you may also reserve to ask the question through the chat box. Please type your name and your corporate name. Okay. So let me begin with the short brief. The key highlights for this second quarter. Basically, the second quarter environment was driven by the recovery in the economic activity, particularly in the traveler segment, which resulted in the increase in the international roaming and IDD revenue. And this helped support both the year-on-year and Q-on-Q growth in our mobile revenue. However, excluding the international roaming and IDD revenue, there was also some domestic recovery in the mobile consumption. However, towards the mid of second quarter in May and June, the impact from rising inflation on cost of energy and food prices, has started to cause consumers to be cautious in their spending. And we continue -- also continue to see price competition remained in the unlimited data plan offering, particularly in the prepaid segment, which continued to affect the ARPU. On the bright side, two things. First is in terms of 5G adoption. We continue to see rising adoption this quarter. 5G subscriber reached about 3.9 million, increased by almost 1 million from the previous quarter. And this is driven by a wider variety of devices at a wider price range as well as the price plan. Despite of that, we continue to see the ARPU uplift close to 15%. Second point is on the postpaid. We now see the revenue mix of the postpaid of 56% of the mobile revenue. And this quarter, we also have the ARPU stabilize Q-on-Q in terms of the postpaid. So with the ongoing 5G adoption and the ARPU uplift, we expect the postpaid to continue to be the key support of the mobile revenue improvement. Fixed broadband. As people now are coming back to offices, students back to schools, we have seen some cancellation of the service. But our gross add and net add remains to be strong. We continue to target and to acquire customers in new areas leading with our quality of service and also competitive pricing. In terms of enterprise, the key growth area definitely coming from cloud through the Microsoft partnership that we have made since mid of last year. So we continue to penetrate well into the large corporate segment who has strong demand in Microsoft Azure and also Software as a Service. Key financial summary. Overall, the -- with some of the mobile recovery year-on-year in this quarter and continue a double-digit growth in broadband and enterprise. So we delivered the core service revenue growth of close to 3%. However, in terms of the EBITDA, this is caused by the rising of the marketing and also content that we acquired last year. In terms of the NPAT, this is also impacted partly from the onetime item. If you all recall, last quarter -- the second quarter last year, we had around THB 500 million of the onetime item from user fee and other items. And this quarter, the onetime item is related to the expiring cash cut around THB 240 million. So at the end of the first half of the year, we have announced a dividend of THB 3.45 per share, equivalent to around 81% of the NPAT. Lastly, in terms of the guidance, we decided to revise down the revenue and also the EBITDA guidance. This is due to the challenging environment in the second half that we are expecting to continue, especially in terms of the rising inflation, which caused the consumer spending to be a bit weak. However, we expect the 5G adoption to continue. There should be more variety of the 5G devices in a broader price range versus second half of the year. So this will continue to be supportive in terms of the mobile business and also hopefully in terms of the ARPU as well. Both fixed broadband and enterprise will continue to grow double digit. So overall, we expect core service revenue to be at a low single digit. In terms of the EBITDA, we also revised down slightly. So we expect EBITDA mainly to be flat or slightly declining. While we focus on the cost optimization, some of the cost items will continue to increase, such as the electricity cost. And also, we also want to ensure that we allocate marketing budget properly to ensure the leadership and also better engage with the customers. Lastly, in terms of the CapEx, we revised a bit down, probably land more close to the previous global balance or approximately about THB 30 billion. 5G will continue to be the key focus in terms of the network investment. We'll be focusing more on the quality management, traffic management, while broadband and also enterprise will continue to have the fair investment to ensure that we capture the demand. So that's all for the brief. We will now go to the session of the Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [1] -------------------------------------------------------------------------------- (Operator Instructions) First question from Hussaini from UBS. -------------------------------------------------------------------------------- Hussaini Saifee, UBS Investment Bank, Research Division - Analyst [2] -------------------------------------------------------------------------------- Yes. First, on the enterprise side. I see that enterprise revenues are growing at a faster clip, but at the same time, cost linked to that. So I just want to understand what are the margins at this point on the enterprise side. And what kind of margin we should target over the medium to long term on the enterprise business? Second question is on the one-offs. So can you take me through the one-offs that -- I'm not sure if THB 500 million was a one-off in the second quarter of last year. And what was the one-off bookings in the second quarter of this year? Those are my questions. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [3] -------------------------------------------------------------------------------- Okay. Maybe on the one-off item first. The one-off item last year of THB 500 million. Part of it is in SG&A. Another part is in other income, altogether around THB 500 million. The bigger part is from the user fee. This was the last year. This quarter, the one-off item is in the other income below the EBITDA line. It's around THB 240 million, causing from the expiry of cash card. Your first question on the enterprise margin. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [4] -------------------------------------------------------------------------------- Yes. I think enterprise going forward, it will be a combination of kind 3 type of services, I think one on the mobile. So mobile, I think we have the very high margin. Secondly, it will be on EDS. I think EDS is still a big chunk. That, I think we also have quite a good margin. And lastly, it will be on kind of resale. A lot of the new growth that comes in CCII, it's more of a resale plus the data center, which I think that the margin is lower. So it depends. I think it's really a mix of the growth of the, I think, 3 type of products. I really can't give you a definite kind of margin projection, but it will be a mix of those 3 that's going to drive the overall margin for the Enterprise group. -------------------------------------------------------------------------------- Hussaini Saifee, UBS Investment Bank, Research Division - Analyst [5] -------------------------------------------------------------------------------- Understood. Maybe just one follow-up on the data center side. So any update on the data center buildup in JV with Singtel and Gulf Energy? -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [6] -------------------------------------------------------------------------------- Yes, I think we are planning to announce something once we confirm the final details. I think that there's some progress on that with the 2 shareholders. So I think maybe within the next month or so, I think we'll be able to give you more detail on that. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [7] -------------------------------------------------------------------------------- Next question, Khun Pisut, Kasikorn. -------------------------------------------------------------------------------- Pisut Ngamvijitvong, [8] -------------------------------------------------------------------------------- Hello, can you hear me? -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [9] -------------------------------------------------------------------------------- Yes, go ahead. -------------------------------------------------------------------------------- Pisut Ngamvijitvong, [10] -------------------------------------------------------------------------------- Okay. This is Pisut from Kasikorn Securities. We have four questions. My first question is regarding the competitive intensity in both mobile and fixed broadband. I just want to know about the competition that has been deferred from last quarter to this quarter. Is this any different? Is it better, stable or worse? And how about the consumer demand you have seen during the rising cost of living? My second question is about the Disney+. I heard that you have less the price trend. Could you please update about it, especially in terms of subscriber reaction and revenue upside from this strategy? My third question is about your network CapEx. Could you please clarify the early as you can see, either fixed broadband or mobile broadband or both? And what are the reasons behind that? My last question is about your proposal to acquire 19% stake of JASIF. What will be happening with the whole deal if JASIF unitholder does agree to terminate the revenue actual line contract for you? Will you continue to buy both Triple T Broadband and also JASIF without that? And what's going to impact to your earnings if there is no termination of the revenue assurance because Khun Tee used to mention that this is an accretive deal? Without that, will the deal continue to happen? And also, if the deal continues to happen, it's still earning accretive, at least in the next 1 to 2 years. -------------------------------------------------------------------------------- Pratthana Leelapanang, Advanced Info Service Public Company Limited - Chief Consumer Business Officer [11] -------------------------------------------------------------------------------- Thank you, Khun Pisut. This is Pratthana. Let me address the first one regarding the competitive intensity or competition intensity on mobile. From June to July and now early of August, we start to see slightly less in terms of price competition in prepaid. When I say slightly less, it's actually maybe about 5% to 10% less than before in the source of number in term. In consumers, mass softened in terms of purchasing power due to the rise of living costs and gasoline and the others. We start to see slightly less people buying purchasing handsets, but that's not directly related to air time, but more or less the handset gets softened a little bit. We hope that towards the end of the year, things will improve in terms of consumers' demand. The iPhone and the new phone will get to launch late this Q towards the end of the year, that will still lead a bit of the demand. The -- maybe a bit on the FBB. When it comes to the price competitions, I would say stable. Comparing to last quarter, this is 1.5 months to quarter 3, not getting worse but more or less stable. Your second question regarding Disney+. Our strategy is ending the promotions, put it that way. The original promotion of Disney+ was at THB 35 when customer early or early bird registered during the first month and later on, THB 49. And now we bring -- we brought the promotion time to the end, going back to the original price of THB 99. Millions of customers have subscribed to that and they continue to have the special price when they subscribe to it. But if the finish the subscription, they unsubscribe and they want to resubscribe again, they may not have the same promotion price. So that definitely gives the value for customers who engage with us early. For new customers, there are choices for sure, either subscribe to the THB 99 or with the mobile bundling plan of postpaid that get benefits of Disney+. So this, for us, is clearly to show the benefits of Disney to the existing customer of Disney subscriptions as well as the postpaid customer and prepaid bundling plan. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [12] -------------------------------------------------------------------------------- I think on CapEx saving. Basically, I think we look at a few things. One, on the roll out of the mobile network. I think there are areas where we feel we can save on investment for this year. So that's why we do a lot of traffic growth that comes actually driven by more of the people on the unlimited package, which there are ways that we can work with the apps to provide kind of better network traffic management. Secondly, because we have this deal with 3BB. So on FBB front, we also try to optimize the investment as well. So that we don't need to duplicate investment or invest in the same area. So with those, I think 2 factors, we are able to kind of minimize the investment for the second half of the year. As to your question about the JASIF arrangement, I think it will be difficult for us to move forward if we don't get the restructure. Mainly because with the pricing that's agreed at the moment, it made the business not competitive in the market. If you use the total rental rate divided by expect that the subscribers and you add the cash cost to operate the business, you'll see that basically it's way beyond the current ARPU in the market. So I think that's one of the reasons why we're really going to be explaining to JASIF unitholders that the agreement they had doesn't make business sense in the current situation. I think we'll be talking more about this after I think next week, next week when we have the Analyst Meeting. Let's see how JASIF perform in the second quarter, and we have a lot more things to discuss about. On the impact to the P&L, if there's no restructure, then in the first 2 years, probably it could be dilutive. But after that, with the synergies, then it's come back. But anyhow, as mentioned, it will be difficult to go ahead without the restructuring. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [13] -------------------------------------------------------------------------------- Next question from Khun Wasu, Maybank. -------------------------------------------------------------------------------- Wasu Mattanapotchanart, Maybank Research Pte. Ltd. - Research Analyst [14] -------------------------------------------------------------------------------- I have three questions for the management. The first one is about the mobile revenue. So if we strip out revenue from tourist and migrants, did the revenue from domestic consumers actually dropped Q-on-Q? The second question is about the 5G ARPU uplift. Khun Nattiya mentioned that ARPU uplift of 5G migration is still close to 15%. So my question is, how did you keep the ARPU uplift at such a high level when the prices of 5G data plans have been declining, especially the price plan of the 5G entry level? The last question is about the NT deal. Is there any update on the upcoming deal with National Telecom regarding the network sharing and also the 700 megahertz spectrum purchase? -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [15] -------------------------------------------------------------------------------- Okay. Let me take the first two questions, and maybe management can add a bit more. On the mobile revenue, if we exclude international roaming, IDD or the traveler segment incoming, the domestic mobile revenue Q-on-Q still have a growth. So we saw some -- that's why we say we saw some domestic economic recovery in the second quarter. However, year-on-year, it's still a decline though. But Q-on-Q, there is an improvement. Your second question on the 5G ARPU uplift. Basically, even though the 5G price plan had expanded downward, but that's basically expanding to capture wider market segment. So in each of the particular segment, we're still expecting customers to move up their plan from the existing 4G plans to the appropriate level of the targeted 5G plans, which continue to provide the ARPU uplift. -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [16] -------------------------------------------------------------------------------- For the NT deals, because of this is a big news of the state enterprise, now the NT already passed all the proposals to the Secretary of DES. And secretary of DES already is sent to NESBC, the National Economic and Social Department Council that have to consider because this is a big project. I think everything according to the time frame that NT plan to make it happen. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [17] -------------------------------------------------------------------------------- Khun Thitithep from KKPS. -------------------------------------------------------------------------------- Thitithep Nophaket, Kiatnakin Phatra Securities Public Company Limited, Research Division - Director & Analyst [18] -------------------------------------------------------------------------------- Hi, can you hear me? -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [19] -------------------------------------------------------------------------------- Yes, please go ahead. -------------------------------------------------------------------------------- Thitithep Nophaket, Kiatnakin Phatra Securities Public Company Limited, Research Division - Director & Analyst [20] -------------------------------------------------------------------------------- Okay. I have three questions. The first question is for Khun Somchai, if I may. If we assume that the NBTC approved the proposed merger between Advance and DTAC, do you think it's going to be net positive or net negative for Advance? For the positive side, when the number of players decline, the price competition should subside. But at the same time, the merger would gain scale. So for the first time, you would have a formidable competitor, okay? So in your view, it's going to be net positive or net negative? That's the first question. Second question is on the prepaid revenue. Your prepaid revenues start declining year-on-year since the last quarter of 2019. And then up until the second quarter of this year, it is still declining by 8% year-on-year. Do you think that's because of the macro factor or because of the migration from prepaid to postpaid? And should we expect the prepaid revenue to stop declining or start growing anytime soon? That's the second question. The third question is on Disney+, okay? I noticed that the cost of content puts out the cost of service. Now on the revenue side, does the revenue generate from Disney+ cover the costs? Or do you think that the services mainly help you reduce churn rather than make profit in itself? So those are the three questions. -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [21] -------------------------------------------------------------------------------- Let me answer you the first question. On the merger of the True DTAC, (inaudible) should be the positive in the industry because when we have less competition, it should grow the revenue more together. However, it still depend on one thing, on the position of the True DTAC and also AIS that we are willing to fight together to be the #1 in the market or not. If both companies seem to be the #1, there are some price competition in terms of clearing the customer in the system, something. If they don't want to be the #1, I think the industry should be healthy in its best. However, I think based on the -- this period, if the merger happened within 1- or 2-year period of time, it really benefit to AIS to bring the customer even we don't compete in the market with the pipe. Customers will move to us for to -- based on the (inaudible) combine among 2 operators, especially in the network side. It is a really good opportunity for the AIS. But after 2 years, after they merge together, that story may depend on the situation that both companies who want to be the #1, the competitor will fit in that period. That is my opinion. -------------------------------------------------------------------------------- Thitithep Nophaket, Kiatnakin Phatra Securities Public Company Limited, Research Division - Director & Analyst [22] -------------------------------------------------------------------------------- Right. May I have follow-up questions on this issue? Since the merger would have scale, do you think that there's a need for you to adjust the payout ratio? Do you need to reserve more cash just in case that they become aggressive after the first 2 years? -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [23] -------------------------------------------------------------------------------- I don't think so that we said, but probably, initially, in our major shareholder, both Singtel and Gulf side, they are really clear to be the lined investment company to do and see AIS dividend company for our shareholders also. I think we plan, 2 year plan in this period with our strategy that tie to the group, I don't think we should have the problem in terms of the net profit and payout ratio. -------------------------------------------------------------------------------- Pratthana Leelapanang, Advanced Info Service Public Company Limited - Chief Consumer Business Officer [24] -------------------------------------------------------------------------------- On your second question, Khun Thitithep, regarding the prepaid revenue. In a big picture industry or especially us, we continue to see the prepaid revenue portions less and less because customers use more than upgrade to postpaid. So that's number one. The second one is more about the spending of prepaid or ARPUs has been declined simply a lot because of overly compete. They compete very badly on the unlimited low plan, that's drive down the prepaid ARPUs. Long term, if the competitions are less, the ARPU shall be very stable on the prepaid segment. So that's my question on number two. Number three, Disney+, their cost and the revenue are matched. So we are not making loss on that. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [25] -------------------------------------------------------------------------------- Next question, Arthur from Citigroup. -------------------------------------------------------------------------------- Arthur Pineda, Citigroup Inc., Research Division - Director and Head of Pan-Asian Telecommunications Research [26] -------------------------------------------------------------------------------- Several questions, please. Firstly, on the revenue guidance, can you please elaborate on what's driving this? Is this mainly on competition or is this mainly in the weaker consumption trends? I'm not sure if it's possible to split the impact between these 2 factors, especially the recovery cycle will be different on those two. Second question I had is with regard to priorities with regard to market share and profitability. Where is AIS focusing more? Would you need to retain the #1 market share position and therefore, would need to compete aggressively until that's retained post consolidation? Or is it focused more on the profitability side? Last question I had is with regard to the guidance. I understand you tied in it to THB 30 billion. Is this more of a deferral into 2023? Or are there specific efficiencies that have been identified? -------------------------------------------------------------------------------- Pratthana Leelapanang, Advanced Info Service Public Company Limited - Chief Consumer Business Officer [27] -------------------------------------------------------------------------------- Let me address the first one regarding the revenue. I would say both. Number 1 is overly compete will drive down the growth of revenue unnecessarily. And that probably contribute the most part of it. But the second part regarding the business activities, COVID, traveling will kind of contribute in the single-digit level in terms of revenue growth. I would say both, but a majority, if you look at the macro picture, the competition dragged down the revenue more than the other factors. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [28] -------------------------------------------------------------------------------- Okay. In terms of priorities, it's a very tough question to answer. Basically, we look at both, and we are not willing to trade too much for one or the other. I think we basically still want to keep a very healthy profit and also majority of the market share. It's a question that we also discussed with our shareholders as well. I think basically, we look at the long-term profitability as a call. So we -- in the end, we'll do everything we can to make sure that we can sustain long-term profitability. If you trade too much of the short-term market share just to maintain profit, I don't think that's a good sign either. Or if you try to gain market share too much at the wrong time and trade off profitability, then it's not money well spent. So I think it is hard to answer, but what we try to do is make sure that we have long-term competitiveness in the market to create even more profit in the future. I think lastly, on the guidance CapEx. I think basically, as mentioned before, we -- for better part of this year, we look at how we can optimize the investment both on the mobile front with the 5G. Because 5G, there are 2, 3 ways that we can really launch a 5G service. So we want to have that investment in line with the handset that's coming in, plus also the economic situation because we need more handsets to be able to really utilize the 5G network. And as well as on the FBB, as mentioned, we're looking at certain kind of cooperation with 3BB to make sure that we don't over-invest in the same thing or the same area. So with those 2, then we feel that we can manage within the THB 30 billion. It's not a deferral. I think basically, next year, we'll look at the demand again and where we need to upgrade the equipment. -------------------------------------------------------------------------------- Arthur Pineda, Citigroup Inc., Research Division - Director and Head of Pan-Asian Telecommunications Research [29] -------------------------------------------------------------------------------- To clarify that comment on the 3BB efficiencies because the deal has not been closed yet and you've mentioned a while ago, it may be difficult to pursue if there's no revision in terms of the contract. So if you assume -- if in case that the deal doesn't happen, then should we then see some CapEx coming back into FY '23, if that's the case? Is that how we should view this? -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [30] -------------------------------------------------------------------------------- Yes. I think there are some, I would say, quick cooperation that the Board can do to make sure that the operation can run smoothly. If you recall what we mentioned when we discussed about the deal, we don't have a very wide coverage compared to them, right? So that's one thing that we find ways to do a quick operation. There are other ways as well, but I think that I will discuss in a bit more detail later. But there are a few things that we can do this year. And it's a really great move. Even if the deal doesn't go through, we can still benefit from that in the medium run. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [31] -------------------------------------------------------------------------------- Khun Thapana, TISCO. -------------------------------------------------------------------------------- Thapana Phanich, TISCO Securities Co. Ltd., Research Division - Research Analyst [32] -------------------------------------------------------------------------------- I joined a bit late, so apologies if some of these questions have already been asked. So I have three questions. The first one is about the JASIF acquisition. I was wondering if AIS have submitted the application for the Triple T Broadband acquisition permission yet from the -- with the NBTC? I just wanted to check if this has happened yet. The second question is regarding the Jasmine or Triple T infrastructure. I understand that the technology level that Jasmine uses employs for their fixed broadband network is, let's just say, not on par with what AIS and True has. Will this result in quite a bit of upgrade investment cost for the -- after you acquire the Triple T Broadband asset or because it's up country and the requirement is -- from the customers, it's more limited, there really isn't much need to have everything as sophisticated as you would have, say, in the Back of Metropolitan area. So just asking about the infrastructure upgrade issue for JASIF network, if you were to acquire it. And lastly, and this one is for Khun Somchai. The -- as you know, the NBTC is still deciding about the -- what to do with the merger. But let's say that they allow it or at least they give their opinion per the 2018 notification. One of the thing that they can do is come up with a remedy. In your opinion, what would be a sensible remedy for the merger that would ensure a fair competition once the merger happens? Would it be something along the line of separate branding for a couple of years? Or do you think something else a bit more stringent measures are required? -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [33] -------------------------------------------------------------------------------- Let me answer your third question. I think NBTC board members, they are considered really fast in this matter. Even the NBTC officer tried to report to them that they have no like to approve that have some criteria to control the merger company something. However, they are on the thinking that they will allow to merge or not merge. If they are -- they have to approve the merger, I think a lot of conditions that they have for the NBTC offset to show the profit that should be fair on the things and can control the company of merger. I think more important thing that they are worried about the spectrum and sequencing, because when they can merge the frequency, we'll hold a lot. They may have some regulation to cannot combine the frequency together because as our position, we are also very clear that when we go to the auction on that frequency position, they are different supply something. If they have to do so and merge, that we can see maybe not fair for AIS. That's another one that they have to consider. And they may think that based on this period, if they need to cut the merger should be the #3 player in the market. They may ask for the period that can merge. That they are thinking in that way. The merger company have to fight the third player in the market. And can get that frequency out with the price something. This is all the things that they are trying to think. I think I still don't know the earlier answer yet. However, the new motto, NBTC, they are really serious and focused to measure to make it fair and also they are willing to have the third player in the market before we get the merger also. This is my internal information that I got. -------------------------------------------------------------------------------- Thapana Phanich, TISCO Securities Co. Ltd., Research Division - Research Analyst [34] -------------------------------------------------------------------------------- So regarding the frequency, I think -- so I guess you're looking for something like a moratorium on frequency emerging for a few years? Or you just can't merge the frequency at all? Just wondering what you meant by not merging, like a temporary measure or more like a permanent ban on merging frequencies until the license expires? -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [35] -------------------------------------------------------------------------------- Still unclear, but if they have to do in the future, there are 2 things. First, they have to compensate back to AIS also. Because when we auction that sequencing, have the value of how much value they have to compensate. I think it's not easy if in the long term, they do. I think in the long term, they try to ask for the merger company to find the other one to take care that we can see it to be the third player. That's the idea. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [36] -------------------------------------------------------------------------------- On the submission, I think we haven't submitted the standout process. It's being -- we'll wait for the shareholders and also the unitholders on the JASIF side to be completed to do the official submission. On the infrastructure, I think basically, it's not all bad. I think there are some good, there are something we need to improve. But -- so that is not going to be a major upgrade that you mentioned about. We also check in the -- you can look at the feedback in the market. Their service is also quite okay in the market. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [37] -------------------------------------------------------------------------------- Any further questions? Currently, we have no further queue. I'll give maybe 1 minute or 2 and see if anybody has further questions. Otherwise, feel free to contact our IR team for any further questions. And also next week on Wednesday, August 17, we will hold the half year analyst meeting with our CEO, CFO as a key speaker discussing on the broad strategic direction and the focus of the second half of this year. The event will be held physically. There will be no virtual or hybrid event offering. For those who are not coming to Thailand, feel free to submit your questions ahead of the time. We will also include your questions into the session. The session will be recorded and will be updated on our website and we send out the e-mails of the record to all of you later. Okay. So if no further questions from -- Okay. I think one more follow-up question from Khun Wasu, Maybank. -------------------------------------------------------------------------------- Wasu Mattanapotchanart, Maybank Research Pte. Ltd. - Research Analyst [38] -------------------------------------------------------------------------------- Just one more question from me. So I'm looking at the document that JASIF has submitted to the set website. And there are 4 agendas that JASIF unitholders would have to consider. So if we assume that the JASIF unitholders approve 3 out of 4 agendas, except the agenda regarding the noncompete costs that would then -- that would allow -- the cancellation of noncompete costs would allow AIS to build the fiber network in the same area as JASIF. So if that agenda is not approved, would you still go ahead with the 3BB and JASIF deal? That's my question. -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [39] -------------------------------------------------------------------------------- I think when we put up all the conditions we would like to revise, that's really what we need, and we feel it's fair. So if we don't get off those, it will be difficult to go ahead. -------------------------------------------------------------------------------- Wasu Mattanapotchanart, Maybank Research Pte. Ltd. - Research Analyst [40] -------------------------------------------------------------------------------- So if the unitholders do not approve any of the particular agenda on the documents, what would be the next step for AIS? Would the deal go back to the AIS Board? -------------------------------------------------------------------------------- Tee Seeumpornroj, Advanced Info Service Public Company Limited - Chief Finance Officer [41] -------------------------------------------------------------------------------- Yes, I think in the end, once when we see the output or the result of the meeting, then we'll need to bring the result back and discuss with the Board. But as mentioned, we already kind of carefully considered what we think is necessary for the business to go on and I think we offer a fair deal to both JASIF shareholders and JASIF unitholders. So nothing changed from that has been difficult for us to move. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [42] -------------------------------------------------------------------------------- So one more follow-up question from Khun Thitithep. -------------------------------------------------------------------------------- Thitithep Nophaket, Kiatnakin Phatra Securities Public Company Limited, Research Division - Director & Analyst [43] -------------------------------------------------------------------------------- I have follow-up questions on the potential remedy. Khun Somchai mentioned that a little later may like the merger to reallocate part of the spectrum to the potentially third player. But then we don't have the third player in Thailand, and we may not be able to find one in my view because telecom is such a capital-intensive industry. So what happen if no one can find a third player, what happened to those spectrum? Do you think it's possible that they would require the merger to return the spectrum to the NBTC like what they do in Malaysia? So basically, the question is that what if we don't have the third player? -------------------------------------------------------------------------------- Somchai Lertsutiwong, Advanced Info Service Public Company Limited - CEO, Acting Chief Corporate Officer & Executive Director [44] -------------------------------------------------------------------------------- It's for sure that they have come back to the NBTC. We thought and not allow. And also NBTC don't want to do on that way because this frequency has made a lot of money to the broadband if they can return even there unnecessary to use it, NTBC have no life to return back for sure. This is the first thing. And it is also -- we thought if they can return and also I think it cannot have the third player in the market. The condition, they may not allow to move until after third player or they allow and approve that I still don't know (inaudible), but the frequency location, they cannot utilize more effective by shifting the frequency, connect together, they will see still there on that position of frequency for sure. -------------------------------------------------------------------------------- Nattiya Poapongsakorn, Advanced Info Service Public Company Limited - Head of IR & Compliance Department [45] -------------------------------------------------------------------------------- Okay. Thank you, everyone, for participating and hope to see you all next week at the Siam Kempinski Hotel and also see you next quarter. Thank you.