Advanced Info Service Public Company Limited (ADVANC) Earnings Call Transcript & Summary

Okay. Good morning, everyone. Welcome to AIS Third Quarter Results Conference Call. As usual, you may -- we will begin with a short brief and then go straight to the Q&A session. [Operator Instructions] So first of all, let me introduce the management with us today. Khun Somchai, our CEO.

Good morning.

Khun Hui, our President.

Good morning, everybody.

Then Khun Pratthana, our Chief Consumer Business.

[Foreign Language] everyone.

And Khun Tee, our CFO.

Good morning.

And myself, Nattiya. So you see the third quarter results that we announced last evening. Basically, in the third quarter, Thailand were continue under the lockdown for the first 2 months that caused the restriction of mobility as well as certain activities. However, beginning in early September, the government gradually uplift the restrictions and as we speak now, the country is open more broadly also to the international tourists. Mobile competition in the third quarter had remained quite fluid. There continue to be the unlimited data plans in the low-end prepaid segments, some time with also free voice offering. We still see this market challenging on going up to date. Despite of both situations around the restriction and the mobile price competition, this quarter, we managed to deliver a slightly flat growth -- a growth -- a slight growth in both year-on-year and Q-on-Q. And this is driven by our effort to retain market share in mobile and also winning share in the broadband and enterprise. The mobile revenue is quite flat. This reflected our efforts to retain the subscriber acquisition in the market as well as that we believe the customer perception around 5G has continued to be strong. The 5G sub base now reached about 1.5 million and on target to reach 2 million by the year-end. In terms of fixed broadband growth, it grew about 23% and now contribute 6% of our revenue. With a strong net add this quarter, over 130,000 due to the solid demand from consumer in continue working and studying from home, especially during the lockdown. So our fixed broadband sub base now reached 1.6 million, and we expect the fourth quarter to continue to have a good growth. In terms of the enterprise, it also grew more than 20% year-on-year from both the market share gain in the enterprise data service and also expanded to capture growth in the cloud and ICT solution. We will aim to continue working on scaling up this business going forward. On the cost side, as we continue to invest in 5G to ensure leadership, our network OpEx increased while we optimize on the SG&A, particularly in the marketing spending. So with our 9 months result, revenue came in flat and a slight growth in the EBITDA. We also reiterate our full year guidance on the revenue to be flat, if not slightly declining, depending on the reopening and the situation around the pandemic and also on the EBITDA to be flat, while the CapEx guidance remains the same between THB 25 billion to THB 30 billion. So that's all for the brief. We now like to open up the line for Q&A. Let's first go through the Q&A from the Zoom platform. [Operator Instructions] Thank you.

[Operator Instructions]

I have 3 questions. The first 1 is about the mobile revenue in the third quarter. So AIS managed to grow mobile revenue by 0.4% Q-on-Q in spite of the COVID lockdown during the first 2 months of the quarter and also the intense price competition in the prepaid market. Have you done anything differently when compared to your competitors? Because my understanding is that 1 of your competitors already reported the third quarter result and their service revenue declined Q-on-Q. So that's my first question. The second question is about the Disney+. How has the deal with Disney+ help support the third quarter performance? Has it helped with customer retention? And also, what's the stable postpaid ARPU in the third quarter, a result of Disney+ subscription, 5G adoption or a mixture of the 2 factors? And my final question is about the outlook of the other service revenue. I understand that the other service revenue has been growing strong because of the Enterprise segment. And can you give us some more colors about the enterprise revenue and other service revenue going forward into next year?

Let me address the first 2 questions. I hope my voice can be audible here. The first 1 is regarding mobile revenue in quarter 3. The first factors of growth came from postpaid, which is continue on as part of a journey to roll out 5G, bringing customer to upgrade to 5G. That 5G piece has continued on benefits AIS along with the expansion of 5G. The ARPU uplift is around 12% to even go up to 19% in the 5G sector that helped the growth in postpaid. Somehow the competitions around country of Thailand still very intense on prepaid size as well as the economy. So on the prepaid side has been already difficult to continue on. We somehow try to make sure that we continue on the competitive answering customer needs. So at the end, so we'll be able to stabilize the revenue in Q3. That's the first one. The second 1 is regarding the Disney+. Disney+ has continued on giving a very good attraction to a customer the major impact for us is a positive in terms of the retentions. There are customers who are up on to Disney+ have longer life and lower churn. So that would be our initial positive impact from Disney+.

On the question on the enterprise, we continue to see positive growth quarter-on-quarter and also year-on-year. In particular, we saw EDS grow quarter-on-quarter, which actually is a good sign. With the lockdown than the businesses having their employees work from home and we also see the CCII, the nonmobile part growing double-digit year-on-year. We continue to see that moving forward into the fourth quarter and also perhaps into the next year itself. So our particular interest is actually cloud and data center and ICT solutions. This has been growing quite strong quarter-on-quarter. And then just to add on the mobile. So during the lockdown, we are also strengthening our acquisition. So although the shopping centers are closed. We do open temporary shops outside of the shopping centers, and we put extra focus on the online sales and also to our daily sales. So that, in fact, has actually helped to elevate the effect of the lockdown.

Okay. Maybe 1 more follow-up question regarding the mobile competition because 1 of your competitors mentioned that starting in the middle of October, they started to see some easing competition in the prepaid segment in some provinces. Have you seen that at all? And was it sustainable in terms of the price increases for the fixed speed, unlimited data plans?

This has been up and down at the weekly basis. We have seen 25 provinces having aggressive pricing, whereby the rest are not in 1 week or the other weeks, they'll be a little bit less of the provinces. So I would say it has been up and down. But overall, I would say, generically slightly better in terms of pricing.

Pisut.

Hello? Hello? Hello, can you hear me?

Pisut, your sound -- the quality of your sound.

Hello? Is this better?

We can't understand you.

Is this better now?

Okay. That's good. Thank you.

Okay. Sorry about that. I haven't asked anything. Pisut from Kasikorn Securities. I have 3 questions, can I go one-by-one. My first question is on 5G handset subsidy. From your 2 million 5G subscriber target by year-end, it seems you have to add 500,000 5G subscribers in 3 months. What would be your strategy to achieve it? Also, could you please update about your 5G house brand handset strategy?

Okay. For Khun Pisut question, let me address this. We now, I think, on track very much if we look at the current month data, which is slightly above Q3. So the 5G plan towards year-end is 2 million, as you mentioned. This quarter, we also have coming new device, which is, by large, is the most wanted, which is iPhone. As a part of this no iPhone 13 5G-enabled, that paid a good way for Q4. So we have a mix of device and 5G from AIS as well as the upgrade plan whereby customers can get 5G from anywhere. So I believe it's on track at what we plan for. On top of that, as you mentioned, the house brand that we do, we just recently launched in the market, still early to determine. But what we see now is in Q4, there could be potentially a little bit slow in terms of injecting in the inventory to the market because of the global chipset issues. So we see also as an opportunity for both our house brand and the top-tier device, bringing customer to 5G.

Thank you. My second question is about your flat EBITDA guidance for the year. If my calculation is correct, your EBITDA guidance should be implying that fourth quarter EBITDA will be lower by 4% to 8% from last year fourth quarter. So please share about your concern for the operation in the fourth quarter, would your EBITDA guidance indicate upcoming 5G subsidy plan to hurt your margin in the fourth quarter?

I think maybe -- the 2, 3 things. One, I think we do see some pickup in operating costs as well as when we expand network, then the network OpEx increasing. Secondly, I think we did take some risk in the sense of the revenue. We still try to be conservative on the revenues. And in the end, I think we do factor some ways in that to make sure that we don't miss the guidance. I think those are maybe 2, 3 factors. I don't think that we -- normally in the last quarter, we spend more on subsidy to -- as is the high season to acquire new subscribers and I think consumer changing phones. However, I don't think that we factor in kind of extraordinary amount as you asked.

My last question is regarding 5G. As your 5G coverage was at 42%, but your 5G adoption was only 4%. What would be your -- the reasons for you to keep CapEx intensively high for next year? Is it possible for you to rationalize your CapEx to match with the adoption, which, of course, is going to be increasing, but it cannot be 50% or 40% next year for sure.

Maybe I address this. Firstly, the 5G coverage is very important for customer when we have the 5G device in customer hands. Currently, the mix of 5G device came in on the previous few quarter top tier for consumers. But slowly and next year we'll be much more in the middle tiers. That's what we prepare for. And that would be kind of supported by the coverage of 5G. So that's why we keep making sure that our network is superior and ready to support upcoming 5G for consumer. And secondly, when we look at the preparation for 5G enterprise that would require the good coverage in many areas whereby the enterprise applications may be upcoming as well. So that's the main reason why we want to make sure that we continue on bringing the best 5G ready for both consumer and enterprise. For the 5G subscribers, it's a matter of time when we have continue on injecting in the device, the number of subscriber, adoption of 5G be upcoming for the numbers. As you may see from our declaration in terms of ARPU uplift, we truly believe 5G will bring the good revenue stream on consumer side as you see now. Continue on.

So just to add also, while we are trying to move more customers to pick up the 5G packages. So Khun Pratthana mentioned, it's very important that when they are having the 5G package, they also want to see that there's 5G coverage. So that's why the coverage is very important for us to make sure that to be ahead of the game and to ensure that customers after subscribing 5G do experience 5G and do are able to use it in the extensive coverage that we have. Another reason is also because we are trying to migrate more of the 5G capacity -- 4G capacity over to 5G. So there's a long-term plan that ultimately, we want to reduce the -- or rather refund the 2100 to 5G. As you understand, it's more efficient on the 5G network in terms of the cost per bandwidth compared to 4G. So long term wise, we have a target to try and migrate or reform most of our structural to be 5G capable.

Now let's move Khun Arthur from Citi.

Several questions, please. Firstly, just to go back on the question on the guidance earlier on. I'm just wondering, like if you're still flagging that revenues and you're actually posting growth already in the 9 months, what's -- what are the assumptions behind this? Because if you look at what's happening in the market, you're already seeing market reopenings and travel reactivations. I'm just wondering what's being baked into your outlook? Or is it just being conservative? Second question I had is with regard to 5G. Are you able to provide some color on the 5G handsets? I understand that you're trying to launch affordable handsets into the second half of this year. How has that played out? Are you seeing some supply issues on this side? And last question I had is with regard to the content costs. Obviously, this has been up in the third quarter as you noted Disney and Olympics had hit it. Are these by nature upfront cost recognitions? And should we see this decline in the subsequent quarters? Or are they mostly variable costs?

Do you want to address the first 1 regarding the guidance.

Yes, I think that the guidance, it's -- I think the quarter-to-quarter movement in the past, we have been, I think, factored in order for the whole year, a lot of cost actually ramping up towards year-end. I think we -- essentially, I think on the spectrum and network. So the first half of the year versus second half of the year will be a bit different. I think that's 1 part. And as I mentioned, when we expand the network, then we also factor in the increase in operating costs. So that's the second part. And I think thirdly, as mentioned and we -- because we try to make sure that we meet on the guidance. In the past, there was quite a lot of uncertainties around countries opening and then lockdown, switch back and forth. So we try to make sure that we put some risk in that revenue number as well. So I think with all those on the last quarter, normally, then we dipped a bit more on the marketing promotion. So with all of that, then we kind of put in the number and then look at the range of the guidance, what would be a reasonable guidance and I think on EBITDA, then I think we feel more order to say flat EBITDA. So I think that's basically not anything in particular that can change, I think, the major assumptions. Basically, as you put it maybe a little bit more on the conservative side.

Well, the second question regarding the 5G device. I presume I understand it correctly regarding the outlook of 5G device that you asked for -- during quarter 4, we believe that the chipset may affect the 5G divide a little bit. The device coming into the market will be a top tier for 5G device and some affordable phone house brand from AIS. The mid-tier device will be a little bit slow for this coming in Q4. When they talk about the top tier device, meaning the iPhone, the Galaxies of Samsung, that's about THB 10,000 up. So that's where the 5G device will come in continue on as normal. But the mid-tier, when I talk about THB 6,000 to THB 8,000, it will be slightly slow, as mentioned. Our affordable device that we launched, the price point is less than THB 6,000. So we hope it will continue and support the customer who want to hop on to 5G in Q4. For the outlook for next year, as we forecast looking at manufacturers, together with partners. So we believe next year, 5G device inject into Thailand roughly another 5 million units. So they're giving an opportunity for us to continue and upgrade customers to 5G. I hope this answers if I take it correctly for the 5G device.

Understood. So now you're seeing sub- $6,000 -- sub- THB 6,000 handsets on 5G in the market. Is that correct?

Yes. In fact, we continue on trying hard to bring in multiple model at this point is 1 model from us, which is below THB 6,000 is still difficult for other brands to come in at this point because the scarcity as a chipset. But we -- if that problem has been eased up, hopefully, by quarter 2 next year, there will be many more coming in.

Understood. For the third one, regarding the content cost, they are probably about 2 to 3 portions when you saw from the P&L. Definitely, the Olympic and Disney+ is kick in, in the previous quarter. For Disney+, we do sales the Disney+. We did not give away. We actually sell the Disney+ service more or less matching of the revenue and cost, which is slightly different from Olympic whereby we do our broadcasting to the public. There are some also regarding the football licensing that we are having it right now, aiming to capture the larger audience of Thailand continue on. But overall, we do believe that it will turn into either the revenue is more importantly, the retentions as so as the reach to the massive groups of customer in some of the particular flagship content like the Football Thai League, that we have been able to secure.

Can I just add 1 point on the 5G handsets. As Khun Pratthana mentioned, we have a number of handsets coming in the mid-price range. We're hoping that from the customer's point of view, whenever they change handsets or buy new handsets, there won't be any differentiation whether they are going for a 4G handset or a 5G handset because the price range will almost be the same. It'll be the same situation a couple of years ago between 3G and 4G. So initially, the 4G handsets are not moving as fast as the 3G. But when the price range the same, it doesn't matter whether it's 3 or 4, and every customer will be actually buying a 4G handsets. So we hope that it will be the same -- very likely it will be the same between 4G and 5G. When you buy a handset, is for the features inside and the technology, whether 4 or 5 is just -- by the way, he comes with a handset.

So next person Khun Piyush from HSBC.

Congrats to the management team on strong operating and financial performance despite of the challenging environment. Most of my mobile questions are answered. So 2 questions. Firstly, if you can talk about your JV with SCB, what is the likely capital investment over the next 2 to 3 years? And would it be limited to unsecured credit? Or would you also look to expand the offering to secured credit? And are you developing your own credit scoring engine? Second is on the 5G adoption by enterprises. Can you talk about how is the trend -- what is the midterm outlook on this? And the economics, like what is the EBITDA margin on this and ROIC profile on 5G to enterprises?

On SCB, I think the numbers of capital injection, it's only initial part. I think the ongoing requirements will depend largely on how fast we grow the loan portfolio. As you know, I think there are certain formulas in the industry that the equity versus the loan, what's the ratio should be. So I think for the 600 initial 600 there will be just to get us started. And then I think there will be a couple more injections following the loan growth. In terms of the numbers, I think we'll hold up until probably around year-end, early next year when we are close to launching the service, then we will give you some guidance on that. On the scope, I think initial focus will be on unsecured. But later on, I think we can look into expanding the service both on the loan side or in other financial services side. Initially, we just tried to leverage the data and access that both shareholders have with the customers. So with that, then I think the initial target that other people can't compete will be in the unsecured loan. So that will be our first focus. But as mentioned, in the near future or in the future, for sure, we can expand the scope of the services to other line of products.

On the question of the enterprise for 5G. Currently, you are doing quite a number of trials and POCs with a number of the industry players, both the customers as far as we term the operational technology players, such as the MOU that we signed with Tata Consultancy Services, plus a number of others. So many trials are ongoing for the enterprise customers to experiment and to see how 5G can actually add them in the factory operations. So we have several trials with the ports with the visual analytics and also for the automatic guided vehicles within the factory throughout. Quite a number of these trials are ongoing, and we are fine-tuning it. And also some of the trials are actually chargeable, although the amount is not big because it's on a small scale. So this year is a year where a number of trials are ongoing. And next year probably will be the 1 that full implementation will happen for some of our customers. Recently, we also launched in terms of the FWA plus. This 1 is the fixed wireless using 5G as a lease circuit with a specific QOS. We also launched the MEC platform that enables our customers to tax out applications with shorter latency and higher bandwidth. And also the private network as well as networks slicing. So all these trials are ongoing at the present moment.

Next question from Thapana from TISCO.

I have 4 questions. Just the first one, I just wanted to get an update on where AIS stand on the recent Gulf, Singtel data center partnership? Would you be doing managed service or if so, would the business model be similar to what other data center managed service firms are doing in the region and sort of any color on that would be great. My second question is about the subsidy. I understand that iPhone typically has a pretty fat profit margin generally. Would you say that the iPhone theme subsidy situation in 4Q. Is that something that's similar to last year where it's not that aggressive or do you expect there to be some competition on iPhone subsidy. And also for your own house brand phone, the THB 6,000, the 5G house brand. Would you be selling that at a loss of breakeven or small profit? Just wanted to kind of understand how the pricing dynamics work. The third question is about bad debt provision. I noticed that it's been coming down despite a difficult 3Q. So have we pretty much passed bottom on better provisioning? Or should we -- is there any risk that it might rise in the next quarter? Lastly, on 5G rollout. So you have 10,000 base stations, 2,600 a little under 50% coverage. Is it fair to say that going forward, since you kind of probably covered most of the urban centers already, would you be focusing more on the low-band 5G rollout. And as a result, maybe the CapEx per base station or the OpEx per base station would be incrementally smaller versus what you've done so far in the past 2 years. So perhaps maybe rolling on the low band 700 like what DTAC is doing. Just to get some sort of 5G coverage but not an intense coverage.

Let me answer you on the first question on the as our major shareholder from come to work in the AIS board. I think the status and the situation in AIS is the same. We are the professional organization and having the come in, it should help us in terms of Singtel is really professional and expert in the telecom operator, Gulf is the lighter static local partner can help us in another way that we -- they can support a less 1 simple like the data center that is have the plan to do. If you know Gulf and Singtel also have the MOU to do some joint venture or some cooperation in the data center that will AIS in that, particularly. Because our data center itself, there needs some to important thing that by AIS by our sales may don't have like the operation called data center, a lot of costs came from electricity Gulf also very expert in they can help us in terms of reduce some costs in this part also. And Singtel also either international, regional worldwide operation they have a lot of relationship with the big corporates like Microsoft or Amazon something. They may be that kind of a partner to use our data center is that as use it and sell it internally in Thailand. This is all the 2 things that can combine and help data center better and better, that I think is the position from AIS itself.

For the second question regarding the device subsidy structures. For iPhone 13 this year, I would say, is roughly about the same subsidy structure comparing to iPhone 12. And iPhone 13 came a little bit earlier. It's about 6 weeks ahead of iPhone 12 when you talk about Thailand timing, which is we launched in, I think, is 8th of October rather than last year, we launched the iPhone 12 is about third week, fourth week of November. For the house brand. When we put on the strategy of house brand for 5G, we intended to cover the entry postpaid whereby, as mentioned, the price below THB 6,000 device, which is the cheapest 1 in the market right now. The other brand, the international brand naming Apple, Vivo, Xiaomi, Samsung have slightly higher price. So what we intended to is to cover the entry postpaid onto 5G. So it will be somewhat captures that section with the monthly fee that we intended for about THB 499, THB 599 as the most affordable 5G for the larger markets. Some SKU on this is also sell as the ready-to-use prepaid whereby customers can hop on to a prepaid on top recurring 5G as well in small portion to capture the higher tier of postpaid.

Maybe I'll just add a bit on the first question as well on the Gulf, Singtel, DC, MOU. I think basically, to us, it's a good sign that I think both shareholders are interested in this sector. For us, we do have our own DCs, and we are also selling DC's service to our customers. So in the end, I think in reality, we will discuss with the shareholders as well whether there will be a good structure for cooperation. I think for as Khun Somchai mentioned, Gulf can bring in a lot of synergies on, I think, the power -- as a power provider as well as I think a lot of good connections with the local companies. Singtel can also bring in I think the regional view, regional scope with -- potentially with hyperscalers and things like that. So with us, then we can provide a lot of, I think, local operations plus a lot of I think, linkage to the network. So it's structured correctly, then we can be a really good players in the DC for the future. On the third question about bad debt, I think so far, to -- normally, we will adjust the level by debt provision according to the situation that happened in the market. The other would like us to be quite precise. So we will adjust it as per the actual bad debt that is happening. This year has been especially, I think, good for us. You'll see that the bad debt number is coming down. Whether there's a risk of rising back or not? I think in the future, it could be in the sense that in the past when all 3 operators are quite aggressive on acquiring subscribers. Sometimes we go down into a lower quality level of subscribers and in the end, those are the people that cost us the bad debt. Even though this year, the economics has been tough. But when we kind of stay away from certain segments or certain areas, that's quite risky, then we can show that we do -- we are able to control the bad debt level in the future, once when things going back up, economy is performing well, then there would be from time to time that when operators try to expand into the riskier segment, then that's when the bad debt could be rising again. But overall, I think all 3 operators are trying to make sure that we do real business with the consumers. So I think all 3 of us are actually not inclined to promote with the risky segments too much. But I just can't say that you're going to spare at this level forever. So basically, there could be risk of rising if things go back to normal.

On the 5G rollout, our current strategy is to use both the 2,600 spectrum as well as the 700 spectrums. For the 2,600 with the 100 megahertz of spectrum that we have is meant for areas of to support high capacity as well as high speed. So initially, for the 2,600, we are using it in the major cities, for example, at Bangkok up and the cities in the provinces as well as the EEC. For 700 largely for coverage, so for the covering 10,000-plus base station that we have, about 10% are on the 700. Moving forward, as we expand our coverage, there will be a mixture of both 2,600 and 700 largely will be on the up country area, where coverage is important, but speed and capacity may not be that apparent. So 2,600 will continue to be focusing on the capital cities of the provinces itself, right? So you're right that moving forward, as we move to expand the coverage, the incremental CapEx will be lower compared to the coverage that we had for the -- when we are using the 2,600.

Maybe I think a lot of analysts quite concerned on, I think, the 5G investment versus the kind of level of adoption in the industry. I think for us, our strategy on this has been a bit different from the other 2 operators. For us, I think initially, when we did invest in 5G, we did invest in a lot of the key city centers where we normally have the 4G capacity kind of pressure. So when we invest in that area, then we use 2,600, which give us a lot of capacity. So in the short term, we can use a portion of that as a 4G capacity, which will help alleviate the peak congestion on 4G traffic. And long term, we can switch back to our pure 5G. So that's why in the beginning, I think we focused a lot more on 2,600 in the key cities. But as you see in the market now, given that people may be allowed to travel, so only have the city areas with a very fast network on 5G alone may not suffice. So we also switched to expand on the coverage itself. You may find a bit a lot to look at 40% coverage population or even 70% appropriate in coverage. But there are many, many ways that we can expand our coverage without overspending the money. But as you mentioned, and we later on and then we switched to utilize more of the 700, which in the short term, give us coverage, but in the long term, can also use as a 5G capacity and in the -- I think in the near future, the dynamic, what they call the spectrum -- dynamic spectrum theory could happen. So but that's mainly on the suburban areas on 700, so it can go wider. Even though we give you a big number of population coverage, it doesn't mean that it has to extrapolate the number of investment as per what we did in the past. In the past, I think last year, and not many people travel. So we focus on a different strategy plus early this year as well. But from now on, I think we target to have a big property coverage because we did price 5G a bit higher than 4G. And I think for the people at the mid- to higher level to feel that they want to switch to our premium not better 5G service, then we need to show them that we have coverage in the major parts of Thailand. I think that's one of the key kind of habit that consumers now get used to. They get used to a very fast connection everywhere. I don't think they mind paying a bit higher, if we can show them that the coverage is real and they can utilize the faster speed and more stable connection that we can provide compared to other operators.

Okay. Yes. So those answer is very clear. I just have 1 more just a follow-up about the data center. So my understanding is correct then that for future data centers going forward, what the business model might look like if you have Gulf Singtel building the data centers and AIS providing local operation as in managed service. And also, you guys would make money from providing connectivity. Is my understanding correct on how it might work?

I think at this point, what we can say is we will look at this together. And we will look at how to best structure the business because there are many segments in the DC going forward in terms of the customers. So you have the normal enterprise, you have the -- what you call the SI aggregators. You have the hyperscalers, all this or you even have the government sector. So all these have different requirements. So we'll see how to best structure our DC and also the commercial arrangement to make sure it fits the requirement of each segment. But what we can say is, with 5G coming and with the way the enterprise or the apps requirement, that going forward, when we look at that, having a telco as part of the DC either AC owner or DC operators or the competition arrangement that we can have, it's going to benefit that the DC business going forward because in the future, DC will be more spread out, because the users requirement will be that they need lower latency compared to the past that maybe they want a big 1 site in a very safe zone. But going forward, I think the nature of the business will require that we can provide a multi-size with some capability to offer on the edge of the network so that they have very low latency to the customers. So with that then, I think AIS as a main operator in Thailand that has core networks all over Thailand plus gateway to the Internet. I think that will give us a bit of advantage over other players.

Khun Maria from Maybank.

I have 5 questions, mostly housekeeping. First is -- can I ask it all and then you can answer or should I ask 1 by 1?

Yes. Maria, please.

So I'll ask all then.

Yes. You can ask all.

Yes. First is that there was a mass 15% jump in data consumption Q-on-Q. Can you give us more color on where the uptick is most visible in gaming, entertainment, corporates and what else? That's my first. Second is back in the second quarter, you mentioned that some of EV are state classified under mobile revenues. Can you update us on how this is a factor in the mildly positive Q-on-Q growth in the mobile revenues? Third is that the percentage...

Maria, sorry? Sorry, we can't hear you very clearly. Can you repeat again from the first question. I don't think I capture your question quite clear.

Okay. Sorry about that. Is this louder now?

A bit better.

Okay. Okay. I'll speak louder. There was a massive 15% jump in data consumption in third quarter. Can you give us some color on where -- in which activity this uptick was most visible, like gaming, entertainment, corporates. That's the first. Second is that back in the second quarter, you mentioned that some EV are still classified under mobile revenues. Can you update us on how this is a factor in the mildly positive Q-on-Q growth in mobile revenues? The third is that presentation shows AIS has 1.5 million 5G package subscribers, but there are 1.6 million handsets on the network. While the difference in the number. The third -- and the fourth 1 is that you used to launch a capital okay nano lending but did not quite take off. What is the advantage this AIS SCB have or because SCB is not also in nano lending. And the fifth one is on the data center. You already have 9 provinces covered. What is the average utilization rate and what is your projection with Central and Gulf influence?

Maria, I apologize if I get the first question inaccurate. My understanding is the first question that you're asking, what source of the driver for the data consumption growth for Q3? Am I getting it correctly?

Yes, not -- like in which activity it is most evident or it is most dynamic.

Yes. Yes. Okay. Continuing on the lockdown work from home has actually drive the growth of data consumption for both mobile and broadband. As well as the competitions of unlimited data plan has played a role as well that customers use probably more than what they need to. So those 2 are continue driving the growth of data consumptions in the third quarter. Okay. The second 1 -- regarding mobile revenue...

You say there's some classification of something under the revenue in the second quarter.

Yes. Second quarter, I remember that it was mentioned that the EV actually is closer to 10%. But in the grouping of revenues in the EV was about 3-over percent I asked. And I was told that it is classified some of it in the mobile revenues.

I think what we -- if I recall correctly. I think what we mentioned was on the enterprise. The enterprise, normally, we classify enterprise mobile business together with the mobile revenue and I think on that day, I think we someone try to understand more on the enterprise segment and then we show enterprise revenue, and that's exclude the mobile enterprise renewal. So basically, it's the rest of the enterprise revenue. So if you lump together the mobile revenue on enterprise plus other enterprise services, for example, like data service, cloud, what we call the ICT, CCII and all that, then it's roughly about 10% of total revenue contribution, if I recall correctly.

How is this in the third quarter continuing?

I think overall is still growing. The good thing is all the enterprises service are growing even in the mobile enterprise is growing, EDS is growing. EDS is the main -- so in enterprise on the telco side of service, then there are 2 main services. One is the mobile service, which normally we lump it with the mobile revenue because when you want to compare it to mobile industry overall, whether it's enterprise or consumer. So we normally lump this into mobile overall. Enterprise then the EDS, which is the main one. It's also growing. The same trend with the rest of the telco industry, which is ARPU is a bit challenging, but we can still grow the number of customers. So overall, we're still growing. And then I think the ICT part of it is still growing the cloud data center is still growing. So there are some segments that grow faster than others. But overall, enterprise is still growing quite healthy. Yes.

The third question of your -- you asked why the 5G device is 1.6 whereby the 5G customer has 1.5. For AIS, when we launched 5G day 1, we actually along with the strategy that customers need to subscribe for 5G in order to be able to get the 5G experience. Not all device can be used for 5G unless they subscribe to 5G plan. So that's a difference. We also, again, allow customers who not yet have 5G, but about to or maybe wanted to upgrade in the future to subscribe to 5G plan as well.

So -- okay. So the extra handsets are the ones that will move to 5G package later on.

You may say that the 1 who have 5G device, but not yet subscribed to 5G, we are not counting as the 5G subscription customer.

Okay.

Yes. I think on the fourth 1 is basically try to understand how SCB will compete in the market, right? I think...

You have done capital okay before contend it did not quite take call. So why is AIS SCB be different?

Maria, you are right Intouch Group used to do the capital or for the lending at that period, it's like a lot or we adjust lending based on the demand of customer, but I don't know everything about our customer well. When we can get with the SCB to be the AIS SCB, this is the digital world, we and SCB also have the data team to do so in this matter. However, when we do we call like the joint venture tied to do all the accounting or the PDPA law. That means we know our customer well, and we can analyze and can offer the lending to the right customer who don't have many back left in the future. That's why it really differs also. This is the thing that I think is a very good chance to do so. in this matter. However, we're likely to update to you, when we set them, we still step by step to analyze the data first after that offer tied in to do some more things interesting based on our control in the digital world also. Is it a different thing.

Yes. I think maybe just to add, it actually come down to 3 things. One is the data compared to okay versus AIS SCB, I think the amount of data that we can leverage, it is quite different. On the SCB, there are many types of data, including financial data that we can also get from the bank side, and then we have a lot of data from our side that can help determine the creditworthiness of the consumers. Secondly, the process. I think this time, we'll try to make a process very simple and very digitized. So there won't be a lot of requirement for documentation, submission or whatever. We try to make everything quite automated and quick because 1 of the few pain points that we research on the customer are first one, normally, when they may some fund and they need it quick, right? So they want to know whether they can get it, not get it in a short time frame. And secondly, a lot of time, they don't feel they're eligible to approach either the bank or even the nonbank institutions because they can't provide a certain type of documents that those people may like to see before approval the 1 can be given. So far we try to solve all those issues, make things very simple, easily approachable. So I think that's where the process will come in. And last thing is the access to the customers. So as part of the JV, then we could be very good at accessing the consumers at the right way, the right approach at the right time. So with that, I think it would be quite a different experience that people can get from capital.

Maria, you have the last question regarding the data center, am I correct.

Yes.

You asked about the utilization rate and whether utilization rate of data center.

I think data center -- it's -- for us, we -- normally, we used roughly in the past about half for our own internal and then the other half I think we are selling. The nature of data center is sometimes we just build the space, the building, and then we don't put in all the equipments just yet. So the equipment can be slowly put in for the growth of the demand. The big investment will come once when we need to rebuild another building or a new place. I think for now, we still have some, what we call, the capacity left over that we can support growth for, I think, normal enterprises. But when you go into talking to hyperscalers, these people will need big number of brands, big capacity to serve them. So it's a different ball game. So with those type of customers and normally either we need to have a land in place. We need to build a new building, different, I think, security for them is very tight. Nobody can go and go out without the permission and things like that. So I think for us, just to let you know, for normal enterprises, we still have spare capacity that we can provide. For I think small deals with hyperscalers we can also provide. But for the big deal with hyperscalers, and we need to look at maybe new investment, it could be at our own land. We still have some land in some of our data center that can provide the structure to house the new DC or it could be a new piece of land because all these hyperscalers, they all come with quite a lot of the requirements. Some will help multi-sites and each site will have to be within certain areas or things like that to serve their purpose. So that will be a different segment. That's why I think when I answered earlier, then we need to look at the customers in 2 to 3 different segments. And then each 1 will try to find a winning solution for them.

We'll take the last question from Khun Pisut.

Yes. Okay. Can you hear me well?

Yes.

Okay. My follow-up question is about your financial service business. Remember that you have the JV between VGI Live and AIS under the Rabbit-LINE Pay, which is also trying to expand the business from payments to other financial services, including unsecured loan, which are -- what are different between Rabbit-LINE Pay and AIS SCB in terms of revenue and value perspective for AIS. Can you leverage the customer base -- customer database from both platforms? And lastly, how can you avoid the conflict give both lending in the same segment.

I think normally, each 1 will try to target the consumers on their own platform. So for what you're asking for is about RLP, Rabbit-LINE Pay. Rabbit-LINE Pay, the first part is, for sure, need to increase the number of payment users that come and pay on RLP. So in the past, I think we have tried -- we also faced some difficulties in the sense that mobile banking has been very popular among Thai people. So competition in that segment is also quite fierce. The payment users are quite key for RLP to be able to expand into lending or other type of services, for example, dealer marketing services because we need certain type of data for the platform to be able to run the model. So I think that will be the first task. We'll see how far we can go with expanding MAU on RLP this year and also last year, there had been lockdowns going on. So a lot of users actually not growing very high on the platform just yet. BTS users are down I think there are 2 or 3 ways that we try to kind of increase MAUs on RLP, but some of those engines have been down for the past 12 to 18 months versus SCB, I think it's 2 different platforms. We won't share consumer data among the true platforms because it's from different partners. However, I think each platform will try to access their own customers on the platform, which in the end may go to the same person, but because of different data that they have. So there will be different model, different risk appetite for each platform. I think in the end, we'll let the consumer choose which 1 can serve them better, which 1 can give them a better way or things like that or a better quota. I think in the end, we don't mind that the platform accessing some of the same consumer, but because it's from different angle, different aspects of data that have been used. So we'll see in the end, board can survive. Because each 1 has the foundation of -- from a different angle. I think -- and that will apply to all the platforms in the country that they try to do lending. I think each 1 will have their own corner, I would say, they were starting to grow from their own corner. For us, we feel quite confident that AIS SCB has a very good combination from the bank side as well as from the telco side. RLP, they're also the line part that's quite strong. So they're going to leverage the line and particularly, I think, BTS and AIS to complement the platform as well.

Thank you, everyone, for joining our section today. See you again next quarter, and have a good day.