The analyst report from Kiatnakin Phatra Securities (KKPS) has increased Advanced Info Service Public Company Limited (SET: ADVANC)’s target price to ฿266 from ฿253, primarily based on contract amendment between Jasmine Broadband Internet Infrastructure Fund (SET: JASIF) and Triple T Broadband (3BB) that should benefit ADVANC’s businesses, especially the Fixed Broadband customers in upcountry with fewer competition in the market and lower overhead costs.
The major upcountry broadband internet provider, 3BB has rented JASIF’s internet infrastructure for a long time. The contract between them guarantees JASIF a stream of income as a rental assurance, but due to market competition and 3BB’s own operation that results in smaller earnings and a failure to meet payment deadline. This has led to the recent amendment to the rental contract by JASIF.
After the acquisition, KKPS believed ADVANC will slash 10-15% of cost redundancy from 3BB’s cost of service and SG&A expense. All these factors led to KKPS increasing ADVANC earnings estimates for 2024/2025 by 6%/10%, respectively.
There are only two telecom titans left in Thailand as DTAC has been acquired by TRUE recently. The analyst estimated ADVANC’s Fixed Broadband (FBB) market share will increase to 45% from 16%, ahead of TRUE’s 37%.
KKPS noted that ADVANC has the lowest FBB Average Revenue Per User (ARPU) among key operators in Thailand. The brokerage firm believed that ADVANC will be able to narrow the ARPU gap over time after the acquisition of JASIF and 3BB and revised ADVANC’s FBB ARPU up by 1%/3%/5% for 2025E/ 2026E/ 2027E, respectively.
Additionally, the acquisition would benefit ADVANC on cross sell, upsell mobile and other services to 3BB’s user at the better price.
KKPS estimated net profit of ADVANC to increase 11% to THB 28,900 million this year. The bottom line in 2024-25 was expected at THB 33,518 million and THB 37,675 million, respectively, reflecting an increase by 16% and 12%, respectively.
Dividend payment was expected to increase from THB 7.69 in 2022 to THB 11.14 by 2025.
