Fitch Ratings forecast weak growth and high 5G investment to weigh on the profitability of mobile operators in Thailand, as the economy recovers slowly from a third wave of the COVID-19 (coronavirus) pandemic.
The company expects flat service revenue for the sector in 2021, down from its previous forecast of low single-digit growth, with operators not in a position to raise tariffs until economic conditions improve.
Revenue began to stabilise in Q1 2021 after four consecutive quarters of declines, with sales falling 2.9 per cent year-on-year last year. However, a rise in Covid-19 cases starting in April could result in another contraction in Q2, Fitch warned.
AIS and dtac both booked increases in revenue in Q1, with higher device sales offsetting declines in mobile service revenue. True Move saw revenue rise 1.7 per cent to THB35.4 billion (US$1.13 billion), with mobile service revenue flat.
Fitch suggested the country’s economy, with its high reliance on tourism, will take time to recover, creating a challenging operating environment for the mobile players over the next one to two years.
Capex will remain elevated to fund 5G deployments. It reckons operators will need to secure additional spectrum, particularly in the 3.5GHz band, to support nationwide rollouts.
The rating agency believes operators will have some flexibility to manage their debt levels by scaling back 5G investment or reducing dividends if demand turns out to be weaker than expected.
