Thai True says may not make profit in 2016 due to mobile costs (updated)

Krung Thai Bank PCL

01/03/2016 12:20

* Plans to invest 40 bln baht on mobile networks in 2016 
    * Aims to gain more market share to one-third in 3 years 
    * Secures $2 bln loan guarantees with ICBC Thai, five banks 
 
 (Recasts with profit comments, 2016 investments) 
    By Khettiya Jittapong and Manunphattr Dhanananphorn 
    BANGKOK, March 1 (Reuters) - True Corp Pcl  TRUE.BK , 
Thailand's third largest mobile operator, said on Tuesday it may 
not make a profit this year due to high investments and rising 
costs on mobile networks after it won two 4G licences last year. 
    True planned to invest 40 billion baht ($1.1 billion) in 
2016 on expanding its mobile networks and has secured a $2 
billion loan guarantee with six banks for a 4G licence, 
Suphachai Chearavanont, president and CEO told reporters. 
    But True expected earnings to improve in 2017, Suphachai 
said, adding that the company aimed to boost its share of the 
mobile market to a third over the next three years from 21 
percent now. 
    Some analysts say True is likely to make loss over the next 
three to five years, mainly due to amortisation costs of the 4G 
licences and investment in network expansion.      
    Of the 2016 budget, 36 billion baht will be spent on 
expanding the 900MHz network to try to take more market share 
from bigger rivals Advanced Info Service  ADVANC.BK  and Total 
Access Communication  DTAC.BK , Suphachai said. 
    That amount was part of its plan to invest 57 billion baht 
over the next three years in its mobile business, he said.       
     
    True's mobile business, which contributed nearly 70 percent 
of 2015 revenue, posted strong revenue growth of 17 percent last 
year and it aimed to maintain that growth rate in 2016, he said. 
    True Corp, 18 percent owned by China Mobile  0941.HK  and 
controlled by billionaire Dhanin Chearavanont's Charoen Pokphand 
Group, said on Monday its net profit for 2015 surged nearly two 
thirds to 4.4 billion baht.  urn:newsml:reuters.com:*:nL3N1682GL                  
    On Tuesday, True signed an agreement with five Thai banks 
and the Thai unit of Industrial and Commercial Bank of China 
(ICBC)  1398.HK  to secure letters of guarantee worth 73 billion 
baht for a 4G licence it won in December.     
    ICBC Thai Bank has agreed to provide the biggest chunk of  
35 billion baht for the guarantee, True Chief Financial Officer 
Noppadol Dej-Udom said.  
    The five Thai lenders are Bangkok Bank  BBL.BK , Krung Thai 
Bank  KTB.BK , Siam Commercial Bank  SCB.BK , Kasikornbank 
 KBANK.BK  and Kiatnakin Bank  KKP.BK . 
    True will pay the first instalment of 8 billion baht in the 
next two weeks and the rest over the next three years, Suphachai 
said. 
    Shares in True Corp surged 5.7 percent to a three-month high 
on Tuesday outperforming the broader market which was up 1.1 
percent. 
   ($1 = 35.6300 baht) 
 
 (Editing by Amy Sawitta Lefevre and David Clarke) 
 ((amy.lefevre@thomsonreuters.com; Tel: +66 26489737; Reuters 
Messaging: amy.lefevre.thomsonreuters@reuters.net)) 
 
Keywords: TRUE CORPORATION GROWTH/