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dtac announces THB0.42 per share dividend

July 12, 2016 – dtac reports total revenues and net profit for the first half of 2016 of THB41.5 billion and THB1.4 billion, respectively, and declares a dividend payment of THB0.42 per share. Postpaid subscriber base and revenues continue to grow strongly as a result of improving network quality and perception, best offers in the market, attractive handset campaigns, and expansion of dtac retail shops. In Q216, dtac registered postpaid net adds of 191k subscribers and 9.2% growth of revenues from postpaid segment. The prepaid segment has been facing several challenges, including widespread handset subsidies, aggressive Mobile Number Portability campaigns, and continuing trend of prepaid subscribers migrating to postpaid. Despite strong growth in the postpaid segment, total service revenues excluding IC for H116 declined 2.2% from the same period last year. Excluding the impact from accounting adjustment of prepaid revenue in Q216, the decline of total service revenues excluding IC during H116 would have been 1.7%.  Revenues from data services, representing 54% of service revenues excluding IC in H116, continue to be the main growth driver. dtac, with a strong spectrum portfolio of 50MHz bandwidth, is well positioned to capture the growth of data demand and provide best wireless services to its customer base on 2G/3G/4G technologies.

dtac installed 17,388 additional 3G/4G base stations during the last 12 months. At the end of Q216, dtac’s 4G service covered all 77 provinces and is on track to cover all 878 districts in Thailand by the end of Q316. On 4G-1800MHz, additional 5MHz of bandwidth has been reallocated from 2G service in BMA, resulting in dtac having the widest contiguous 4G bandwidth on a single frequency band. All customers with 4G-enabled devices are able to enjoy the best 4G experience in the market. In addition, network quality and perception have gradually improved along with the expansion of the network. As a result, the number of 4G subscribers increased to 3.5 million at the end of Q216 from 1.3 million a year ago. The total subscriber base stood at 25.0 million, more than 92% of which had already been registered under DTN. Besides network improvements, dtac launched ‘dtac Music Infinite’ and the ‘dtac prepaid’ brand to offer attractive and relevant services for digital lifestyles. New products and services will be launched on a regular basis to help dtac become the No. 1 digital brand in Thailand.

In Q216, dtac increased spending on prepaid handset subsidies to defend market position. Furthermore, selling, marketing and general administrative expenses, excluding the one-time restructuring cost, were well under control despite the high level of competition. Cost of services also declined from lower regulatory costs, which was partially offset by higher network OPEX. As a result, EBITDA margin for the first half of 2016 went up to 33.6%, compared to 31.5% in the same period last year. Moreover, depreciation and amortization expenses went up due to continued investment in the network. Consequently, H116 net profit declined 62% from previous year.

We have revised our outlook for 2016 to reflect the actual results in H116. The outlook for 2016 comprises (1) slight decline in service revenue excluding IC from last year, (2) EBITDA margin in the range of 31-33%, and (3) similar CAPEX level as last year.

Lars Norling, dtac’s Chief Executive Officer, said “We are pleased to see the continuation of strong growth in the postpaid segment. This reflects the improvement in network quality and perception, and our efforts to offer customers the best Internet experience, attractive and relevant digital services, and value-for-money. In addition, data revenue growth has also accelerated, mainly driven by video and music streaming services. We have a strong spectrum portfolio and are well positioned to capture the data growth. Moreover, we have allocated 20MHz of 1800MHz frequency band, the largest in the market, to provide 4G service in BMA, and plan to expand the 4G network to cover all 878 districts in Thailand in order to serve the strong growth in demand for mobile Internet. In addition, we will maintain our value-for-money position on price plans, topping packages, and handset deals.

Spectrum is not a short-term concern as we already have a strong spectrum portfolio with 50MHz bandwidth. Moreover, we have every intent to participate and win additional spectra in future auctions. We would also like to encourage the regulator to put forward a clear spectrum roadmap for the industry in order for all players to better make a long-term business plans.”