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

Good morning, everyone. Welcome to AIS First Quarter 2022 Results Conference Call. This is Nattiya, Head of Investor Relations. We have management -- 3 management with us today. First, our CEO, Khun Somchai.

Good morning.

Our Chief Operating Officer, Mr. Goh Seow Eng; and our CFO, Khun Tee.

Good morning.

[Operator Instructions] So I'll begin with some brief and then we'll go to the Q&A. As you see the result, we would say that the first quarter of this year is still impacted mostly by the Omicron strain, which has an impact to the consumer sentiment and especially in terms of mobile business. However, the broadband and the enterprise remain to receive a positive note from this. In terms of cost side, we have continued to manage quite decently. And therefore, in terms of the EBITDA, it remains quite flat year-on-year. NPAT, however, declined year-on-year. This is due to mainly the acquisition of new spectrum last year. In terms of mobile business, competition remained quite fluid. We continued to expand our 5G in order to strengthen our leadership and ensure that we acquire the strong quality subscriber. The unlimited price plan in terms of mobile competition remains in the market. We also observed some heightened competition in the month of April. And because of the rising inflation and the situation around the consumer sentiment, we believe the situation around the price competition will remain challenged for the rest of the year. In terms of fixed broadband, this quarter, we have added around 93,000 subscribers, which is considered to be quite strong, even though slightly below what had happened last year, but this year is also -- last year, we also had some positive tones from the government spending, but this year, we continue to believe that we have a solid demand of the broadband coming in. Enterprise as well, as we have moved to make the strategic partnership with Microsoft last year, we have observed a nice increase in terms of cloud business where enterprise customers have been increasing in terms of their demand and, therefore, the enterprise business continued to grow close to 30%. Overall, because of the dip in terms of revenue, but there is still much of it to -- for us to execute for the rest of the year, so we have yet to revise our guidance. We still stand on our top line guidance of mid-single digit. We expect that within the second half of the year, more traveling -- traveler segment and consumer sentiment could gradually picking up as well as we intend to utilize our 5G leadership in bringing in more mid-tier handset and continue to drive the adoption of 5G that giving higher level of ARPU. Broadband, as mentioned, we believe there continue to be a solid demand. So we still target a 2.2 million subscribers by year-end as well as on enterprise. On the EBITDA, as mentioned last quarter, this year because of the recovery of the economy and the drive on 5G, we will expect some rise in the marketing spending. I might not see much of that yet in the first quarter of the year, but as the economy is recovering, more events has been -- will be happening mostly toward the second half of the year. So we're still expecting the EBITDA to grow at a low single digit. And lastly, on CapEx, between THB 30 billion to THB 35 billion, excluding of the spectrum payment, that mainly is to serve the expansion of 5G, ensure that we continue to invest for a quality network. Expansion of the 5G in terms of population coverage will be using mostly the low band as well as the AIS Fiber, which we target 2.2 million. So that means we will expand into some new area as well. So some part of the CapEx will be allocated for that. However, I think for the rest of the year, if the economic situation is not as we expected and if we observe some soft demand, there's always a possibility for us to looking at these investments. And whether we need to revise it down is yet to be seen. So that's all for the brief. We now like to open the floor for Q&A. [Operator Instructions]

First question from Khun Pisut, Kasikorn Securities.

Can you hear me?

Yes, please go ahead.

Okay. This is Pisut from Kasikorn Securities. May I have 3 questions? The first one, your first quarter core revenue and EBITDA were short of your full year guidance, but you keep your guidance unchanged. And you just said that the price competition will stay challenging throughout the year. Please share with us key drivers. Are you expecting to boost the growth of core revenue and EBITDA for the remaining period of the year? This is my first question. My second question regarding the tax charge that I noticed that is quite -- up quite a bit. Why did the effective tax rate in this quarter increased to 19% from, I think, around 17% plus/minus previously, if I calculate -- my calculation is correct. Would this 19% tax rate be applicable for the rest of the year and also next year? And my last question is regarding your negotiations with NT on spectrum and facility rental fees that I think Khun Somchai used to mention before. Should we expect to hear any good news on this by this year? And what could be the magnitude of the cost saving, if you can share?

Okay. Maybe on the second question first, the tax charge that has increased, this is because, if you recall, since 2016, we have a number of the government tax incentive where we received the reduction of the tax for about 5 years. So some of those programs have already ended. So basically, I think this year, we are expecting the effective tax rate at around 19%, as what you see. Next year, I think it should remain around this level as well. Your first question on the shortfall from guidance and the key driver. Let me begin with that and maybe management would like to add anything. On mobile, I think, one of the key drivers definitely is on 5G. We intend to drive 5G. As we -- as of today, we continue to see the adoption of 5G bringing in upward in terms of the ARPU. The ARPU uplift remains close to 15%. And we expect more of the mid-tier 5G devices to come through. That's number one. Number two, I think for the existing subscriber base, we also have been using data analytics to manage what we call customer value management in order to try to upsell churn management and try to increase their spending with AIS through cross-selling and upselling. For example, they're using our mobile. They have not been using our broadband yet or not yet on the digital content. We'll try to encourage them through the multiple services that they can have with us. That's on the mobile side. Fixed broadband will -- definitely will be the key element that helps the top line. As you see, we have been expanding in terms of our market share nicely. The quality of the fixed broadband subscriber has also come in good quality. And this helped us increase the revenue per household. So we continue to target the existing AIS mobile subscriber base to be expanding the usage of our fixed broadband. And enterprise, despite still being quite small to the revenue portion, around 3 percentage-ish, but it continued to grow very strongly. We believe that currently, we have a good position with the preparedness of our staff and organization to push forward with the enterprise segment.

I think that as Khun Nattiya explain you about how we still have the hope of the Q2, especially in the second half, not only on the internal market that Nattiya told you, we see the positive side. When the country opened in the second half, it should have some new sort of avenue that we go on the COVID situation, [ rely on the tourists, on the roaming ] revenue something to compensate this matter. I think the revenue is not only on the competition itself, it's also on the economy. Also, if you compare this quarter compared with the last year, while last year the revenue [ can't ] grow because on that TAM, NBTC also subsidized some program for the consumer. So this is the thing that we will do -- we will monitor on the Q2 result before we adjust or share any guidance as Khun Nattiya updated you. I would like to reply you on the NT 700 megahertz offer. NT, we approached with a proposal that I updated all of you last quarter. The good news is that our proposal got the approval from the Board of NT, but I still don't announce in the public because, in detail, this project really needs to come to cabinet to be approved. I think we have the pushback. Let's say, in the second half, if the project -- this happens, we should have some sharing revenue on our 5G investment to utilize on the network sharing with the NT also. Let the -- all the process be passed by cabinet because this is a long-term cooperation with NT -- between AIS and NT.

May I add a little bit on my last question. Khun Somchai, you used to mention about the negotiation with NT about rental fee. I'm not sure about on both spectrum and also on the tower rental and also facility rental that -- you noticed that the way that U.K. is higher than your competitors and you are trying to bring it up, could you please update us about this one as well?

On the rental fees, we are still in the process because we do step-by-step. We do -- if you remember, we cleared some applications and some cost cases. That's the first one. Now we talk about the NT 700 megahertz that I updated to you that we got the approval internally from the Board, but offers [indiscernible]. On your rental, tower, we still are in the process because they have to have a reason how they can reduce. That means we have some negotiations still in the process [indiscernible].

Next question from Khun Wasu, Maybank.

I have 3 questions overall. The first one is about the number of prepaid subscribers. So at the end of the first quarter, AIS had around 33 million prepaid subscribers, which is almost on par with the pre-COVID level of prepaid subs in the fourth quarter of 2019, even though the tourist arrival is nowhere near the pre-COVID level yet for Thailand. Could you please explain why AIS has so many prepaid subscribers? And should we expect the prepaid subs to rise further now that the tourist arrival is recovering during the remaining of the year? The second question is about the hearing for the Focus Group on the topic of the merger of True and DTAC. During the hearing, I heard that one of AIS representatives stated that True and DTAC should not be allowed to combine their spectrum licenses. And if they combine the spectrum licenses, AIS should be compensated accordingly. Could you please elaborate on the legal grounds for this argument by AIS? And my third and final question is about the joint ventures that AIS is planning. Could you please give us the latest update on the digital lending and data center joint ventures?

First question on your prepaid -- on the subscriber of the prepaid. As you mentioned that now our prepaid sub base has increased quite a lot, yes, hasn't had impact from the tourist segment yet. So throughout this year, if we have -- as the country is reopening, we also expect the prepaid segment to come in a lot more. I think this is also as we continue to be focused in each of the area we operate and ensure that we gain a fair share in the number of areas that we compete with our competitors. So we continue to ensure that we execute that throughout the year. That's in terms of prepaid. Second question, maybe our CEO...

I will update all of you in our AIS' position on the merger call based on our co-player in the governance space. Now even merger maybe -- as you all know that maybe benefit us in the long term, like the few carriers in the market. However, as the direct -- independent directors also asked us to show our standpoint in the market, that should give all information to the regulator, called NBTC, to know all the things. We [indiscernible] why the merger should not happen because [ it may be ] against the law. Even some people said they can do based on the announcement of NBTC. But our legal officer says that by law, it should not -- it's really, really illegal [ except they visit our position ] to show them in the public. Another thing that you asked me why we asked for some compensation on the frequency. Now based on the auction period, if you remember, when we auctioned in any slot, there are different cost and price. That means when they are merge together, they have the opportunity to reallocate or set up that kind of allocation of the frequency. That's why we asked for some compensation. Actually today, even the law allows to transfer the frequency among AIS and NT or True and DTAC, something, they have to pay the transfer fee, something, if they merge and they can get it for gain. No need to pay us [indiscernible]. That means the [indiscernible] that we ask them to compensate up in this matter.

On third question about the progress on joint venture. On data lending, I think it takes us a bit longer to develop the platform and the system. So I think we do expect to start the service by, I think, the second half of this year. So it's about quarter-ish delay. On the data center, I think we are at the final stage of finalizing the plan. So hopefully, within this quarter, we'll announce to the market what the structure would be.

Maybe one follow-up question. During the pre-COVID times, for example, in the fourth quarter of 2019, how many prepaid subscribers or SIM cards were coming from brands and tourists, like, out of the total 33 prepaid subscribers -- 33 million?

I can get back to you on that later on. So next question from Piyush, HSBC.

Three questions for me. Firstly, some of it has been discussed, but just want to understand, like ARPU is down, right, quarter-on-quarter and you've given the reasons. But if we are seeing an improvement in 5G ARPU and 5G adoption, what is the underlying trend X for X 5G subs? Like how much is the ARPU down for that segment? And what would be the driver for that segment to increase ARPU? It's just the consumer sentiments improving and reopening the economy or there could be other factors which would drive? That is the first question. Secondly, the roaming revenue. Could you share what proportion of your total mobile service revenue is today from roaming? And what it was in the fourth quarter of 2019, before the COVID? And third question is on what is driving fixed broadband ARPU increase quarter-on-quarter and the outlook for the same?

Piyush, this is Goh Seow Eng. I'm relatively new COO for AIS, so bear with me as I answer your questions. The first one is, yes, we are migrating customers from 4G to 5G, and we are seeing an uplift in terms of ARPU there, Piyush. But what's happening is that the downward pressure on the rest of the base is pretty intense because competition is keen in the past 2 quarters or so. So the biggest intensity is, of course, on the prepaid side. And there, as you know, we've got 33 million customers. So although we are migrating customers as fast as possible to 5G, there's a greater downward pressure on the 4G side, particularly on prepaid. Sorry, Piyush, can you repeat your question again on the fixed broadband?

I think second question is on percent of revenue from roaming. I think that's roughly about 3% of the total mobile revenue.

Yes.

Pre-COVID level would be between 2.5% to 2.8% pre-COVID depending on the quarters. And then I think as of this quarter, it's still below 1%, 0-point-something percent.

Yes. On your question again, Piyush, on the fixed broadband?

So yes, I was asking fixed broadband ARPU saw some sequential improvement. So what is driving that and the outlook of the broadband ARPU?

Yes. So what's driving that is we are -- although we are expanding rapidly in terms of the customer base, but what we're trying -- what we're also doing is also upselling our current base to higher speed plans, what we call, up-speeding.

Next question from Hussaini, UBS.

Three questions from me. First is on the competition. So I just want to understand what are the key drivers of competition? Is the competition a reflection of weak macro? Or -- and just also want to understand that who is driving the competition in the market. Second question is on your partnership with Microsoft. So just want to understand how better you can deepen that partnership. Means can AIS as part of the JV with Singtel and Gulf be a [ pride ] of hyperscale data center for Microsoft? So that's second question. And a related question is how much data center capacity you have? And what percentage of it is used for internal purposes? And finally, any update on spectrum auction, the 3,500 megahertz spectrum auction for this year?

I think on the competition driver, normally, based on the economy, not good. Customers have not much money to spend. That is the main reason. That's why we have to review the cost. But more important thing that, I think based on this period, as you know, they tried to announce a merger to get -- when the merger news coming up, some of the customer on DTAC or some True, they may -- would like to migrate. It is all the standard that I used to interview in the public that in the world when the merger happen, some of customers will walk away from the original operator. However, they try to maintain that kind of customer. That's why there are some [indiscernible] situation in this period, try to protect their customer. This makes more fierce competition.

Let me address the one on our partnership with Microsoft. Currently, we are actually in deep discussions with Microsoft in terms of how we can deepen and broaden the relationship. I would say that the relationship is going very well, and we are working hand-in-hand on a number of ventures, which I won't be able to share right now. But we are looking very much, of course, to widen and deepen that relationship.

That -- what we can share in terms of data centers, we have in total 9 data centers that are serving both AIS operation as well as external customer. We don't share the exact capacity or the portion, but we will say that majority of the usage on current data center is for internal operations. And your last question, I believe, is on the auction, right?

Yes, on 3.5 gigahertz spectrum auction.

I think, for the auction, as you see the news, the new NBTC has already been in place. We believe that the auction of the leftover spectrum on 3.5 gigahertz will be the main task for this new NBTC. However, it may take a bit more time for NBTC. Based on what we see in the past how NBTC works, we don't think that this year will be possible for the auction to happen. Maybe sometime during the first half of next year. Next question, Arthur from Citi.

Can you hear me?

Yes.

Several questions, please. Firstly, with regard to competition, you mentioned things worsened a bit in April. Can you please elaborate on how this has developed in terms of volume and pricing? Second question I had is with regard to the recovery expected in terms of revenues. Are you able to share how the trends have been moving month-to-month? Like are things actually improving in March and April once the market had actually reopened? Third question I had is with regard to the ARPUs. If you look at the 5G pricing, you mentioned around 15%. Yet, the postpaid ARPUs seem to continue to slide even with the rising adoption in 5G. And when I track it versus your competitor, who doesn't really have a proper 5G offer, it seems to be just trending alongside. Why are we not seeing that uplift in overall ARPUs with 5G?

Okay. Well, sorry, Arthur, can you repeat your first question about competition and volume and pricing? What was...

I just wanted to get a better understanding because you had mentioned that competition has started to revive again in April. How will that change? Are you seeing it moving towards greater data bundles? Are you seeing price cuts happening in the market?

Yes. So what we are seeing actually is a combination of both, Arthur, particularly in the urban areas. And a lot of this is due to the unlimited data plans with fixed speed, where our competitors are used to put on these special promotions for a week or 2. Right now, those special promotions seem to be ongoing all the time. So the competition has gotten a lot keener there. So it particularly centers around unlimited data plans and fixed bid.

And the pricing is going down on that side as well, is that right?

Sorry?

And the pricing for these unlimited programs is actually trending downwards, is that correct?

Yes, they are. Yes, they are. Yes. And your second question, Arthur?

If you can get a picture in terms of the monthly trends in revenues. I know that Jan and Feb have been impacted by Omicron and lockdowns. Are you seeing improvements into March and April, for instance?

Yes. Arthur, if I heard you correctly, and you're not coming through clearly, is that what the trends are in the last 3 months in terms -- we -- the competition remains just as clean, and we are not seeing an uptick in terms of -- a slowdown in terms of the competition. So what's happening is, as I mentioned before, is that the 5G, we are experiencing a good uptick in terms of ARPU, but the overall pressure on the 4G side is still very great, and we've got a large proportion of our customers on 4G.

Sorry, maybe I wasn't clear. The line is bad. But in terms of consumption levels, given that lockdowns have basically ended in March, are you seeing people spend more on telecom services towards March and April? Or is there still pressure based on macro factors?

No. Essentially, the spending -- the level of spending is about the same. The macro factor is that there's -- the economies are under stress, and there's inflation.

Understood. And the last question was on your postpaid ARPUs because it's been trending downwards even with much greater 5G adoption. Is it simply because we're seeing 4G ARPUs going down faster?

Yes. We've got about 11 million postpaid customers and just a proportion of that is on 5G. So again, the proportion of 4G is much, much higher. And therefore, that's putting the stress on our ARPU.

Our next question, Ranjan from JPMorgan.

My first question is, with what you have said in terms of competition and revenues not improving in March or April, even after the Omicron impact, what is going to drive out the wireless revenues for AIS in the industry? How do you get to your mid-single-digit revenues target?

Yes. I think the number #1 one, Ranjan, is in terms of moving more customers on to 5G. As you heard us just now, there are more mid-range 5G handsets coming online. And as they come online, we essentially expect them to go on -- in greater numbers onto the 5G packs, and that will help improve our ARPU in terms of that. Right now, essentially, the challenge that we face is that although we are successful in moving customers to 5G, but the number of 5G customers in proportion to the number of 4G customers is still relatively small.

But for the mass market, is 5G bringing any value to the customers? Why should they be migrating to 5G and paying 10%, 15% higher cost when 4G services are getting cheaper and probably covers all their needs? I mean what forces people to adopt 5G?

No, essentially, thanks, you've articulated that. Yes, that's the challenge that we face. And so what? In terms of 5G, of course, there's higher speed. And one of the things that we are going to be very focused on is, of course, the lower latency of 5G. And of course, we have 5G packs. They also have a lot more data to use.

I understand the higher data allowance. It's just that, like, I don't know what people are doing with the lower speeds and lower latency -- higher speeds and lower latency, which they can't already do on 4G. So is there a reason for most people to migrate towards 5G right now? I can understand there will be some high-value customers who choose to migrate. But can this become a mass market adoption?

Eventually, it will become a mass market option, Ranjan, there's no question about it, and 5G is meant to be a mass market option. But right now, what we want to do is, as you know, in terms of any innovation, there's different segments of customers. And one of the things is that we are going to be able to charge a premium to the early adopters. And that's why, these are the ones who are moving over to 5G first. And hence, I think, what you're also asking is perhaps our migration is lower. And the reason that -- one of the things is that we don't want to brush that migration is to make sure that we are able to gain the extra baht or the extra dollar from these early adopters.

Okay. My last question is...

You're right. I'm Somchai. You're right. Today, even 5G speed is better and also the latency is low or something. However, the [indiscernible] consumer may not see the difference as much. However, in reality, the 5G pack should be more benefit than the 4G pack in term of the [ cheaper ] buy that they can spend on the same amount of money that they pay. However, we are [ lucky ] based on the market competition. There are some factors on the 4G. Even [ fixed paid ] connect with unlimited that can make them more happy something. This major problem that we cannot [ lift up ] the 5G package that's very, very benefit to the customer, I still hope one day, all the operators -- our competitors, True and DTAC, they will also be in line. One day when the situation, like merger situation, all the operators should be considered in the unlimited 4G plan if they can take it off. These are the things you [ lift up ] on the 5G package. Not only us that suffer, our competitor also suffer. You can see in the China market, if a [ free ] operator understand in the real situation, while we invest in 5G, what is the 5G benefit to the customer? The industry will grow up. This is some certain period that in the very, very fierce competition that cannot make the 5G happen. But -- however, we don't give uplifting, as Khun Eng mentioned, we also try to differentiate our 5G benefit to the customer. This is a thing that our [ plan ] on the second half, we will have a lot of new things. Like, this year, we also have the 360 broadcast for the [ super ] match on the Liverpool and ManU in Thailand. If they use the 5G, they can have some [indiscernible] that's the -- this is [ some segmentation ]. However, in the mass market in the total picture, all the operators in Thailand should be [ leveraged ]. If not, we still are [ stuck ] like this. You are right on the condition based on, we have the 4G unlimited pack that [indiscernible] the market today.

Okay. Maybe one last question. I have noticed that you have reduced your interest-bearing liabilities. Is that something that you'll look forward -- look to continue doing going forward?

Sorry, Ranjan, can you repeat your question again, interest-bearing liabilities?

So I have noticed you reduced your interest-bearing liabilities. Is that something that you'll be doing going forward to manage your interest income -- interest expenses?

Yes, I think it depends on the cycle. I think the -- last year and this year, I think the cycle is we kind of deleverage and maybe continue to depend on cash flow as well. I think we try to minimize the interest expense as much as possible. Yes. But looking at the interest rate trend, so I think maybe, going forward, it's going to be on the upward trend. So I think toward later part of this year, we may try to kind of fix some of the long-term rate and try to borrow so that we can fix the ship away at the moment.

Khun [ Craig ] from Citigroup.

Okay. I have actually 3 questions. So one quickly so on -- first, on COVID normalization, we all have seemed to imply that upside is going to be from reopening. But may I check if there's any kind of segment that you've gained during COVID that probably should normalize as well? For instance, like people use online, like, new sign-up for online learning or people who upgrade their package because they [ use Zoom ]? And is there any kind of a risk that we get some product leakage as we -- we kind of are only pricing in tourist return and reopening. But is there any pockets or any segment that you think we should kind of budget for any potential kind of a normalization effect? Should I go through all the questions first?

Yes. Great. We are watching that very carefully. So far, we don't see the effect yet on people downgrading. So for example, in terms of the fixed broadband side, the fiber broadband side, our sales are equally as strong as last year first quarter. So we don't see people going back to their old behavior. We are watching that very carefully.

Okay. I'm just curious because I noticed a lot low end consumer, at least people around me, like, they help, at home they upgrade a lot of their package for their kids' online learning. So that I'm not sure that's probably explained some of your earlier question about divergence between upgrade 5G, but remaining sub has been weakened. And that's actually related to my second question about consumer budget in situation of rising cost of living. First of all, can you share with us the kind of -- any risk of downsizing budget for telco in the past? I understand that past high inflation was in early 2010s and probably 2008 back then. But back at the time, soft commodity prices that tie people who are producing are still at least good, but this time around, the rising cost is [ clearly real ]. And I think that all the rural income, crops are not so great. So any sense of pressure that you feel right now? Or -- because you see data on province level, is there anything that we should think about in terms of the risk that could offset the reopening, uplifting revenue momentum in the second half?

Okay. I think all the -- the most concern that seems like everyone have is, I think, how do we grow the business? And what kind of drive competition in the past few quarters? I think this is my personal view. First of all, I think given the merger that's trying to happen, the 2 operators try to make sure that market share shift become very little. Otherwise, it may sway the deal. So for the past, I think, 2 quarters -- actually, there's a natural move of consumers to come to us given a better service and the unclear [ certainty ] on the other 2 operators. But they need to protect so that the deal can go through. That's why you saw some of the low-end price pack in the market, trying to make sure that people don't move. And also, a couple of that -- a couple on that is also the bad economic situation that we feel. But why we still keep the guidance is partly because of 2 things: one opening, like you mentioned, that's supposed to bring in, I think, more revenue or more income for the type people; and secondly, we believe that the low-price pack in the market doesn't benefit anyone, right? So after the shareholders of the other 2 operators approve the deal, then hopefully, everyone can come back to focus on building the business. So that's what we try to target, hopefully, try to manage the low-end pricing, slowly increase that in the market. Secondly, you asked about whether we see or feel that the higher cost of living has any impact. To be honest, we do feel. But because our spending as a portion of the total spending of the consumer is still a little, so I think the impact will be less severe than other services or other sectors. And hopefully, when we have the opening of the country, then the impact would be lessened because of the growing economy again.

Actually, my last question is -- sorry, it could be -- sounds very basic. But the way you explained is that the price pressure is because the merged entities seem to offer some package. But I thought that would be more like the retention package. Do you actually see your client base try to leverage that and kind of come back to you and say, [ those guys offered them this? ] Because I thought retention package only lower the ARPU, but given that it's not as if they are pushing your client with that package so the client kind of come to offer you. So -- or my read is wrong. And actually, it does feel over to your own client base, too.

I don't think that's a big effect. The big effect is more on the low-end price plan that, I think, people introduced into the market, especially in the first quarter. I think on the retention plan, everyone tried to minimize and that's on a smaller scale. It's not going on in a big way. The one that's really in the mainstream market is low in price plan.

Khun Pisut?

I have just one follow-up question for Khun Somchai, basically. On the merger deal between DTAC and True, I don't quite get why Advanced is going against the deal. What could be your -- what could be the benefit for both near term and long term for the shareholders from the scrap of the deal if you succeed to do that? Also, Advanced mentioned about the remedy from the NBTC if the merger can be proceeded. What kind of remedy? Is it a nominal remedy or what kind of remedy that you are looking for?

As I mentioned in the beginning, the merger will go or not go, it depends on the regulator. However, as our position, we show our standpoint in the public, what remedy of the merger, have effect to the customer, have effect to the [indiscernible] thing. Let them understand the legal regulation, something. However, if they can merge, it also benefits as our investor committee forecast. But as a good governance corporate, we have to show our standpoint in the market. This is all the thing. But when they can merge, we also ask for some benefit or some compensation, like I told you on the -- example of the frequency that we go to auction . Now we have some projects with NT. When NT is loading its AIS, may be they missed to transfer some frequency to us something. By regulation today, we need to pay transfer fee. This is all the thing by regulation. However, if the merger can do, they have some combining frequency that no need to pay anything that is not fair for us also. This is some example that we have for the regulator if they allow the merger happen, should compensate us in any way that we should get.

Next question from John. [Operator Instructions]

Can you hear me? I'm John from UBS. I just wanted to learn more about your 5G...

Sorry, John, can you speak louder? It's quite far.

Is it better now?

Yes.

I'm John from UBS. I just wanted to understand more about your 5G strategy. So I see that currently, you are mainly monetizing 5G through consumers like True Mobile. You're trying to make a migration towards -- from 4G to 5G to increase your ARPUs. But I'm trying to get a better understanding, are you -- do you intend to move this technology and monetize it over the enterprise segments? And how are you going to charge these enterprises? Are you going to offer a full end-to-end, maybe Software as a Solution services? Or are you going to charge by connectivity charges, like data traffic? And if this is the case, how do you see complementing with fiber revenue? Or do you think it will actually cannibalize it?

John, this is Goh Seow Eng. Actually, your assumption that we are only monetizing 5G on the consumer side is incorrect. We are actually monetizing 5G on the enterprise side, too, especially in may -- we have assets and we have projects and actual customers in manufacturing, in transportation and logistics in terms of our ports, also all the way into smart farming and other industries. So it's not just the consumer side. And on the corporate side -- on the enterprise side, it's not just selling 5G alone. What we do is we layer on top services like IoT, like cybersecurity, cloud and things like that.

So it's more like end-to-end service, right, in the case you are charging on a project basis?

Yes. That's right.

Next Khun Thapana, TISCO.

Just 2 questions for me. I'm not sure if I heard this right, but during the presentation, you mentioned that there could be a downward revision to CapEx -- your CapEx guidance. If so, what will be the condition that would trigger such a revision? And are we talking about a significant amount or a minor adjustment? That's my first question. The second question is for Khun Somchai. If you mentioned about the 700 megahertz partnership with NT Co. that's been approved by the Board. And also, I believe Khun Somchai also mentioned that this partnership needs to be approved by the cabinet first. Is there a reason why the cabinet needs to be involved? Because in the past, whenever NT Co. does a deal with the private operators, they only need to get Board approval and did not have to get government approval. Is this because NT Co. needs to make some sort of a large lump sum payment to AIS and that's why a cabinet approval is needed? If you kind of shed light on that, I would appreciate it.

Your first question on the CapEx. We still guide the same range of the CapEx, THB 30 billion to THB 35 billion. What we mentioned earlier is that if we observe to see lower demand than we had expected, there is a scope that we could revise the overall CapEx guidance, but not yet revising down at this point.

On the 700 megahertz of NT, why they have to go to the cabinet? Because this project, when they asked for the budget, even NT have their own money on budget, they proposed this project for the 5G before the auction to the NEDS, mean National Economic and Social Department, to approve in the total picture. After they got the frequency and tried to plan to roll out the network, they faced the problem on their budget. That's why they have to talk to AIS or another operator try to do the network channeling project, something. When the project conclude, they have to back to NEDS and get the cabinet approval to protect themselves because this is a total project, get a lot of money, but not in the one time. They have to pay based on implementation in 15 years on the license of frequency. These are the things that are on the normal process of the big projects for the state enterprise.

No further questions at this point. So thank you, everyone, for joining our first quarter results conference call. See you next quarter. Any follow-up questions, feel free to contact our IR team.