Mobile service market to grow 3 to 5% amid tourism surge

The annual growth rate for the mobile service market is forecasted to sit between 3 and 5% this year due to cost-cutting efforts by operators and an increase in mobile traffic and international roaming calls brought on by a surge in foreign tourists.

Pisut Ngamvijitvong, a senior equity research analyst at Kasikorn Securities, asserts that these growth factors, along with a decrease in competition following the merger of True Corporation and Total Access Communication, have contributed positively to the sector.

Despite this, the market’s future remains uncertain due to the expiration of three spectrum ranges currently in use by the two significant operators, in cooperation with state enterprise National Telecom, set for September 2025. The National Broadcasting and Telecommunication Commission plans to auction off these ranges in the third quarter but hasn’t yet disclosed the official details of the timeline.

The merger has resulted in less competition and improved the performance of major operators. Both Advanced Info Service (AIS) and True have reaped the benefits of ongoing cost reduction in this year’s first quarter. Additionally, a surge in foreign tourists has increased mobile phone service revenue streams via mobile traffic usage and SIM card sales. Typically, international services, including network roaming, generate between 4% and 6% of total revenue for telecom operators.

The significant telecom firms have heavily invested in their 5G network installation and coverage over the past few years. However, the investment for 5G capacity is now significantly less, in line with the saturation of new 5G individual users in the mass market, Pisut said.

“Several factors have generated positive performance by the major mobile operators in the first quarter.”

Mobile market

The major operators anticipate a revenue growth rate of 3 to 5% in 2024, slightly higher than the previous year’s growth. AIS has benefited from acquiring Triple T Broadband (3BB), which led its consolidated performance in the first quarter to grow 10%, up from regular organic growth.

The planned auction of the three spectrum ranges by the telecom regulator may create ambiguity for the major operators. If the licence auction results in bid winners paying hefty prices, it could lead to a downturn in performance. However, if the auctions end with lower winning prices than previously, it would be a positive sign for their future performance.

True reported 800 million baht (US$21.65 million) in normalised profit in the first quarter of this year. Nakul Sehgal, Chief Financial Officer of True, said the company’s turnaround with 802 million baht (US$21.7 million) in normalised profit, along with a fifth consecutive quarter of earnings before interest, taxes, depreciation, and amortisation growth, occurred in the first quarter of 2024.

AIS disclosed its operating performance for the first quarter of this year, with a total revenue of 53.3 billion baht (US$1.44 billion) and a net profit of 8.45 billion baht (US$ 229 million). This growth was driven by the continuous expansion of the tourism sector, a focus on quality service delivery across its 5G network and the 3BB FIBRE3 broadband network, and efficient cost management, reported Bangkok Post.

AIS has set a capital expenditure for the year at 25 to 26 billion baht (US$677 to US$704 million) to strengthen digital infrastructure, primarily for the 5Gand broadband network, to support both consumer and industrial growth.