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

Good evening, everyone. Welcome to our second quarter of 2026 Results Conference Call. First, let me introduce our management, our CEO, Khun Pratthana. We also have our CFO, Khun Tee. Our Chief Enterprise Officer, Khun Phupa. and Chief Retail Business, Khun Prapat. And this quarter, we have two new Chief to be present for you guys. You guys may have not met them yet. We have our Chief of [indiscernible] and Chief Broadband Officer, [indiscernible] and myself are sitting behind the camera and I will be briefing you the results and running this session. So before we begin today's session, let me quickly introduce our Virtual Bank click, which was launched in July with deposit products and now has just launched the lending service. The platform is powered with alternative data, enabling a faster and smarter loan approval process and connecting with AIS Point and Privilege program. So if you are paying with clicks, you'll get 10x points. So if anyone of you haven't tested our lending mechanism, please go ahead and do so. Now let me begin our serious short brief. So in second quarter, despite the rate economy, we sustained the revenue growth momentum from resilient demand for connectivity. In our Mobile business, the growth was driven by 16% year-on-year growth in data usage, continued PT adoption, which reached [ 19.7 million ]. This is growing 41% year-on-year on 5G subscriber and digital content offerings. On fixed broadband, the subscriber growth remained healthy despite seasonal softness from the rainy season and integration activities. The ARPU trend continued to improve, supported by our focus on high-quality customer and value-enhancing offerings, including premium broadband package and content. In enterprise, the revenue growth recovered Q-on-Q. This is in line with improving economic quality led by continued demand for cloud solutions. Sales and retail benefited from strong demand for premium smartphone and our ongoing strategy to expand digital lifestyle products across both online and offline channels. Overall, we delivered solid revenue growth, together with prudent cost management and enable us to remain strong profitability despite uncertain economic environment. As a result, our results exceeded our guidance across all key financial metrics. And at the same time, we continue to improve both EBITDA margin and ROIC, which now reported at 19%, driving by strong operating performance and disciplined capital investment. The balance sheet also remained solid with net debt to EBITDA around 2x, while our average interest costs stay low at around 2.6%, providing us with continued financial flexibility. Despite our strong performance, which exceeded guidance in first half, we remain cautious about the future economic outlook. The geopolitical rigs and economic environment remain fragile, while consumer sentiment, although improving in June is still relatively soft. In addition, we faced a higher base in second half of last year as well as the possibility of recognizing initial loss from Virtual Bank in the second half of the year. Therefore, we maintain our guidance for both revenue growth and EBITDA. While we are confident that the results are likely to come narrow towards the upper end of our guidance. For CapEx, we continue to invest in strengthening our network infrastructure to support the growing demand for connectivity and digital services. And lastly, I would like to advertise this package, which is Play Our Package. If you are building a little stress during earnings season, we would like you to help us subscribing to this Play our Package. We have brought flagship sports content into one package at a very, very affordable price. This is a [indiscernible] starting from now on. And if you are AIS customer, you can subscribe for just THB 199 per month, and we hope you enjoy this. And at the end of the short brief, we start the Q&A session now.

We have the first one from Piyush HSBC.

If I may, like 3 questions. Firstly, what are the investments in second half, which are weighing down on your EBITDA growth outlook, specifically how much of initial investments you are looking into virtual rank? Secondly, prepaid ARPU, strong improvement sequentially also. Could you talk about the levers which helped prepaid ARPU this quarter and the outlook for the same -- for the second half? And lastly, CapEx is much behind the full year target. Where are you like planning to spend in second half. Would it be material acceleration in second half? Or could you spend less than what you have guided for the full year?

Yes. I think on your first question, cash query, you worry about the second half EBITDA, right? I think -- when we started the year, we also mentioned that this year, we'll try to save fundamentals. One of those things will be the IT spending, right? So IT spending in this era is -- a lot of that is going to be OpEx, right? So cloud base and everything. And we are consolidating a lot of operating apps within the organization. So I think that will be one that's kind of weigh down part of the EBITDA for the second half when we go through all the implementations. I think there are other spending that we also try to increase a bit to make sure we still maintain competitiveness. The integration of the broadband side. It's also another expense that may incur in the second half of the year. And lastly, I think with Virtual Bank coming online, so there could be just some contribution from there as well.

That let me answer on second question about the prepaid ARPU increase. The prepaid ARPU is increase coming from the consumption better average Q-on-Q with better about 5% more on the BPO in H1, along the way in we also try to applaud the right pipeline that customers will be able to affordable on that but along the way we prepare some more better to let them consume more continue.

Regarding the network investment, especially CapEx, we have a very clear plan on the second half of which is matching the rising of the capacity needs, the increase in consumption. So we do plan to invest as we guided.

Can I just ask on prepaid ARPU? What's the outlook? Like are there any initiatives which you have taken in second quarter or recently, which would further help in ARPU improvement in prepaid side?

Actually, the prepared ARPU, we remain focus on quality, not just on the exiting even on the new acquisition, we also pay attention on the new quality with new acquisition at [indiscernible].

We have Ranjan from JPMorgan.

Again, my first question is on the guidance. I think I've been asking the same question for the last 10 quarters, I think. If you take the end of your EBITDA guidance, we come to a quarterly run rate for EBITDA, which is implied in the guidance of around in THB 31.5 billion, which is going to be like 4% down quarter-on-quarter. So it seems pretty steep if you're growing the business. We understand there are going to be some investments. But if you could just help us understand what is the level of spending to bring down EBITDA by 4% as per the implied guidance? And that's outstanding in the higher end? Or can we assume that there is a bit of conservatism that you're embedding into the guidance? The second question is on the Fixed Broadband business. You have a slowdown in customer growth, but the ARPU has also softened a bit. Can you help us understand what's happened there.

I think on the guidance, overall, like we mentioned since I think last quarter, what we most ensure is the overall GDP and processing power of the people. And I think that that's why you also see the other side, the lowering the revenue guidance. For us, we -- right now, we don't want to change anything because we want to make sure that at least if we're going to miss, we're going to miss on the correct side of things. And it would be correct, then we're going to overachieve, right? So I think that is more our style. It's not -- doesn't really mean that we're going to spend a lot more than usual for this more of a conservative guide to make sure that we -- in the end, we can deliver what we say, want to deliver. The real fear for us is we're still not sure how the impact from the war, the price increase and all that. And second half, you're going to start to see some of the price increase or cost increase on the device, the handset and some of the equipment that we use in the operation. So that's also part of the more conservative side that we want to make sure we can deliver.

Okay. For then now we focus on customer value and now I did not impact more. And the resources may have a problem on the lending season and customer economy cannot stay on this time. I think for the quarter 3, I may focus on the customer value for the -- our strategy.

I think in the end, I want to say that it's no impact. But I think we know what we are going through. I think partly we are going through the hardest integration. This year, as mentioned, will really migrate IT systems. We're really going to merge the operation. It's going to continue through the second half of this year as well. But along the way, I think there are a few factors that may impact the operation or the result. One is the weather. I think this year, we have really hard wind storm in many areas in Thailand. Second, economy, when the economy is bad, I think right now broadband will feel the effect first. And lastly, the operation does make the whole things a little bit more complicated for our staff and our partners as well. So I think for those three reasons, then you see some quarter good some quarter may be less good. But overall, I think we still command the majority of the net add in the country. and market share of the [indiscernible] and revenue growth still continue.

We have a question from Pisut.

I have three questions. The first one is about the Fixed Broadband business for up with [indiscernible], I think this is the first time in many quarters that your Broadband revenues growth was lower than your competitors, not sure you notice or not. I just want to know what is happening in the market, the competitive dynamic has hit? And how do you plan to improve the growth and gain the market share gain in the Broadband side? Secondly, I have one question about the EPL [indiscernible]. It seems you are no longer the exclusive partner of the EPL like before, how many EPL subscribers did you have at the end of the last season? Looking back, what are the key lessons from your partnership sense as well? And what's your strategy going forward? I think you are trying to accumulate a lot of spot programs internationally? And my last question is about the lending business at Quick Bank. How much have you lent up so far? And since -- if I understand correctly, the loan amount is kept at THB 20,000. What happened if the customer does not repay the loan? What is your collection strategy? And can you [indiscernible] or suspend the customer mobile or broadband services if they default? This might -- that's my first -- third question.

I think we do notice on the Q-on-Q, you mentioned. But as I talked earlier, I think we overall trend and the trajectory doesn't change. If you look year-on-year, we're still growing at a decent rate compared to our competitor. Q-on-Q, sometimes it's too short to say anything, but our focus is still trying to grow the sub base and also grow the quality subscribers. This year, it's doubly tough for us because we are going through, as mentioned, the operation -- the integration on the front line and the system that we use in the operation. So it has complicated things a little bit more. And that's why I think the second quarter was a bit softer than usual. But we still feel that we are very competitive in the market. And once when we finish the integration, the resources that we have on hand and the products that we have, I think we can really win the market and the major share as we plan.

On the second question regarding EPL. Maybe I may not be able to release exact numbers of the last season. We all have heard a lot from Jazz so you can probably work it out from there. But the last is, and we have achieved what we aim to achieve in terms of collaborating with Jazz to launch exclusive package for our customers. And for the past few quarters, I have addressed the collaboration revenue sharing collaboration program. to come up with the special packages for customers. And it has been a great take up. I would like to address it that way. Our key focus since then and even from now on is to make sure that we bring in the best content and the best experience for customers. We're accumulating many of the premium content, especially the sport contents. And recently, as some kind of upsell cross-sell at the beginning of the meeting, we have launched the special plans, so-called playoff that customers subscribe and get multiple content at once at very affordable price available for everyone, inclusive of even non-AIS telecom customer. So that's what we aim for the strategy is to bring in the best content for the customer. At this point in time, customers also be able to access to EPL directly by purchasing direct to MonoMax or to Jazz in order to enjoy that particular content through any connectivity, especially from our connectivity with best quality as possible. If you ask about, well, could we review of key learnings. I would say #1 is we believe that the right price point, customer will take up at the larger size of the addressable markets. Number 2 is the quality is very key. In order to deliver the content without great quality, the content fulfillment and enjoyment may not be able to go as anyone want. So number 2 would be the quality. Those are two important pieces. I'd like to really address them.

I think on click, we may not or we should not comment on that operation. But what I can tell you is everything is going as planned, in terms of both the deposit accounts and the lending account. We did see some of the the trend in the social world. I think that part, we have to deal with it. It's some of the the bad trend in the society that I think all the lenders have felt before. So it's nothing new. I think all the BNPL players have faced that. So we will go through this. I think there are already a lot of -- since the beginning in the credit scoring in the risk framework. They have design to deal with this. And what I can only tell is going as planned, and we will follow up with them. But when I asked about -- if they don't pay right now, they think it's a separate entity, we will have to deal with the [indiscernible] based on the legal of each of the business. Maybe I have to leave it at that.

Next, we have K.Nuttapop.

Three questions, please. First one, people up, you seem to meet your double-digit growth guidance for 3 quarters. Should we expect a stronger second half from you? Second one on product sales. I see product sales and also gross profit for product sales has been increasing a lot. Can we expect like AIS to have like more older of iPhone or some soon to be distributed that we can grow more in term of product sales? Lastly, on maybe as a broad view of India AIS point of view I think prepaid kind of like driven by consumption, as you mentioned. But can you give us some color between like war period, post-war and we see oil price and then [indiscernible] came in at positive. How has that been driving in terms of usage? And in terms of that postpaid and also Fixed Broadband ARPU drop, would the content of losing EPL hit on that, but other content does not help with something? And may I add whether I think you invested something to broadcast EPL. Would that be reusable into your new content? Finally, I mean I will come your 2 new Chiefs, but the -- Yes, you forgot to introduce yourself a new Chief marketing.

Talking about that number, right, even though we see the recovery from the customer from the war and uncertainties, we see some recovery back into the -- after the Q2 and actually start of Q3. We still see the challenging or the price of the hardware and some delay of the projects. If I answer you directly, I mean I would aim for the high single digit, not double digit as of now until the situation gets better on the pricing of the hardware and ramp. That would be my answer.

Okay. for product sales, yes, the first half of the year, we grew about 5.9%. And I see the good momentum to the second half of the year by having to new product launch of the Samsung and the iPhone. So those are the the two products that I think people are waiting for, including we're going to introduce two new activity, which is the omnichannel that we call [indiscernible] for AIS. So that's going to be the the activity that going to stimulate the market of the product, the sales.

Let me address the last question regarding an overall view for prepaid, as well as postpaid, the ARPU has been driven by the growth in consumption and the growth in demand in using data. You see very clearly on prepaid has discontinued on as [indiscernible] have addressed. On postpaid as well, in fact, on mobile consumption, the -- on mobile postpaid, the consumption growth as well as ARPU. But the EPL from the report is also inclusive of different mix of ARPU and consumptions. In postpaid, they also have M2M, machine-to-machines, the car and related of which is totally different profile coming to a little bit more mix into the base of postpaid, that whr you see flattish in ARPU because of those mix. But if you segregate it down into the consumption in mobile postpaid, we continue on growing as well as ARPU. [indiscernible] and post-war, pre-war does affect a bit in terms of the sentiment. We do have seen -- we did see summer spike up during the government program early of the month when customer or people have a bit more money in their wallets, they tend to purchase package a bit more. So definitely, economy are not going to be good, then it's a caution that the growth may not be super high, but it continue on, as mentioned, it's all about the demand to consume. And now today, mobile data become essential part of everyone's life and we want to make sure that we continue to sell them at best.

A quick follow-up question, please if I may. About the daily product sales up. I'm talking about whether we can have, let's say, first quarter, maybe you have 1 million last year. Can we have like 2 million volume kind of like something like this to boost sales since your sale has been increasing in that [indiscernible].

For some products, we have a proper planning for the -- for Samsung and Oppo. I think that I have been request more sales. But unfortunately, it's very difficult to have an extra supply from the Apple.

Next, we have Wasu from [indiscernible].

I have around four questions. So the first one is that when do you plan to finish the fixed broadband business integration? And also once the education is completed, should we expect the pace of the Fixed Broadband revenue growth to pick up? So that's the first one. The second one is about the admin expense. So in the previous conference call, I think the management mentioned that IT modernization costs we'll keep the admin cost at high levels. However, if you look at this quarter, the admin cost dropped by 13% Q-on-Q. Was there a big drop in the admin expend in this quarter? And how should we look at the quarterly trend of the admin spend going forward? So that's the second one. The third one is about the [indiscernible] bundle at [ THB 199 ]. Prior to this, the launch of the cheaper plan I think MBA package costs like THB 249 per month and golf package cost THB 499 per month. Are you concerned that the ship bundle would have negative impact on revenue and profit as customers could downgrade to THB 199? So that's the third one. And, the final one is about the EPI packages. Since AIS stopped offering EPL after May of this year, was there any negative impact on the Mobile and Fixed Broadband ARPU in the second quarter?

I think integration will largely finish by this year. I think there is still some portion that's going to continue for a year or so around the network and all that, but majority part will be finished this year. And after that, we really want to push for more growth on the revenue side and also the subs. But we'll see. I think there will be more products coming out if you notice then we haven't really launched any new products since the start of this year and partly because we need to spend more time on the migration. But after that, then hopefully, we can pick up more speed. On admin, maybe quickly, there was some of the reversal on some of the restructuring costs that we accrued before. Some involve people, some other restructuring costs that we plan. But in the end, we didn't execute. So we reversed that and that's why it's lowered the admin for non-IT for this quarter.

For the Play all Packages, when we compare with the previous vertical package of a particular spot, you mentioned about the Golf, the NBA made in NAFL with slightly higher price comparing to pay all. We'd like to address this, as I answered earlier, the package work to a certain extent for the customer group we truly believe with the right price point, we can expand the market as big as possible for the addressable market. The whole attempt from us is to come up with the best price packages and bring to the massive -- much massive markets as big as possible to answer the customer needs instead of customer go out for the piracies. So with this particular very attractive pricing of THB 299, THB 199, definitely, the ARPU per one who used to pay THB 499 will be lower. But we do not worry at all because we believe that the number of subscribers who hop on to a value package will be manyfold more. So that's what we aim for, and we are pacing through that. Lastly, on EPL packages and ARPU. There will be slightly small impact for a particular person who pay to us before with the past seasons but not a very big because some of those packages are net revenues, some of those packages are gross revenue. So at the end of the day, there is just slightly small impact.

Okay. May I have one follow-up question for Tee regarding the admin cost. Since there was a reversal of expense in the second quarter, that means this is a low base, right? And the third Q and 4Q should be higher than this when it comes to the admin expense trend?