TT&T racks up first quarter loss, True’s profits nosedive; costs to blame

16 May 2007

Thailand’s largest provincial fixed line operator TT&T yesterday announced that rising costs were behind a net loss of THB440 million (USD13.4 million) in the first quarter of 2007, down sharply from a net profit of THB318 million in the same period of 2006. Revenues dipped slightly year-on-year but increased from the fourth quarter as a result of growth in high speed internet users and revenues, helping to offset declining income from core voice services including fixed line and public telephony. TT&T said its total expenses in the first quarter fell significantly from the previous quarter, but rose from the first quarter of 2006 mainly due to the increase in cost of sales and services. In particular, it pointed to costs for supporting future sales growth of high speed internet, which mainly included subsidising the costs of ADSL routers and modems under sales promotion programmes for new customers. Operating expenses also increased from employee-related expenses, outlet expansion costs in provincial areas, advisory service fees, media advertising and public relations costs, utilities, spare parts, and the loss from dilution of shares in a subsidiary.

Fellow private sector telco True Corp also reported a sharp decline in first-quarter profit due to higher costs and interest expenses. True’s net income in the first three months of 2007 fell to THB477.6 million, down from restated profits of THB1.12 billion in the first quarter of 2006, despite a THB1.2 billion boost from a one-off foreign-exchange gain. True said that costs of sales and services rose 11% to THB9.85 billion, up from THB8.86 billion a year ago, while interest expenses rose 16% to THB1.67 billion. The full-service provider said it incurred higher interest and operating costs from last year’s acquisition of its partners’ holdings in its multimedia subsidiary TrueVisions, whilst mobile unit True Move posted losses amid cut-throat competition in the cellular market. However, despite the poor bottom line results, True Corp said its consolidated service revenue of THB13.9 billion was up 8.4% from the fourth quarter and 7.7% from the first quarter of last year, whilst group EBITDA rose 27.9% quarter-on-quarter and 6.3% year-on-year to THB5.1 billion. True Move signed up 8.1 million GSM subscribers by the end of March 2007, behind market leader AIS with 21.1 million and second-ranked DTAC with 13.3 million at the same date. True Corp also reported that it paid off THB2.3 billion in debts in the first quarter, thus bringing down its net debt-to-EBITDA ratio to 3.7 times. Despite the decline in the year-on-year figures, the quarter-on-quarter figures improved in all True’s major business segments, the company said.

Thailand, Triple T Broadband (3BB), True Corp, True Move