Advanced Info Service SET EU & UK Road Show 2013 SET EU & UK Road Show June 17 21, 2013
AIS at glance 53% revenue market share 44% subscriber market share No.1 mobile operator in Thailand 37m users Breakdown of Service Revenue Breakdown of customers Quick introduction Officially launched 3G 2.1GHz service in May 13 covering 20 provinces under a 15 year license of 2x15MHz bandwidth on 2.1GHz spectrum. Provide nationwide 2G network on 900MHz and 1800MHz under Built Transfer Operate contracts which will be expired in Sep 15 and Sep 13 respectively. 2
1Q13 Key Financial Highlights Financial Highlights (Bt million) 1Q12 4Q12 1Q13 % yoy % qoq 2013 Guidance Service revenue ex. IC 26,593 28,206 28,466 7% 0.9% 6 8% Voice revenue 18,702 19,014 18,737 0.2% 1.5% 2 3% Non voice revenue 5,973 7,225 7,687 29% 6.4% 25 30% Sales revenue 4,636 6,068 5,152 11% 15% na Total revenue 35,178 38,182 37,492 6.6% 1.8% na EBITDA 15,694 15,428 16,293 3.8% 5.6% na EBITDA margin 44.6% 40.4% 43.5% 116bps 305bps 41 42% Capex 1,805 3,633 5,976 231% 65% Free cash flow (EBITDA CAPEX) Bt70bn over 3 years 13,889 11,795 10,317 26% 13% na EPS (Bt/share) 3.00 2.84 3.34 11% 18% na 3
Healthy mobile data growth despite limited bandwidth Non voice revenue In 1Q13, despite network constraints on 900MHz, mobile data usage continued healthy. *Non voice services = SMS+Ringback tone+enterprise+mobile data+others More than 1/3 AIS customers used mobile internet 3G subscribers expanded from 4.5mn last year to 5.3mn, nearly 15% of total subscribers. 7m smartphone users (19% smartphone penetration) Data growth indicators Data subscriber (million subscriber) Mobile data usage Mobile data revenue +21% YoY +66% YoY +64% YoY 10.5 12.7 4
3G 2.1GHz investment & strategy 5
Building the best 3G network at world standard Bt70bn capex over 3 years build a stand alone network to better position for long term growth 2013 May 7, 2013 official launch for 3G 2.1GHz Now 20 key provinces 800k customers* >10m subs capacity +800 BTSs per month End of 2013 77 provinces 70% population coverage 2014 2015 90% population coverage in 1H14 97% population coverage 20k BTSs *since prelaunch on Apr 9,2013 6
Targets 8 10million customers on 3G 2.1GHz 40% 3G device 2013 Target 8-10m subscriber 8m 12.7m 60% without 3G device 5.3m 3G 900MHz subscribers 3G devices users Total data users 7
Generating revenue on 3G 2.1GHz 3G-2.1GHz Network 3G 2.1GHz revenue Roaming 3G-2.1GHz SIM Roaming 3G-2.1GHz Device 8
Expect EBITDA margin 41 42% in 2013 43.4% 41-42% 140 to 240 bps Margin compression Marketing expense (-50bps) Expect marketing expense to reach 2.5% to total revenue Building 3G awareness Attract customer to use the new 3G Roaming 3G to 2G* Assume roaming rate at Bt1/minute Compression depends on roaming rate and roaming traffic 2012 2013 EBITDA margin 9
Balance sheet is ready for 2.1GHz asset The new 3G 2.1GHz network will be depreciated over useful life estimated at 7 years The 2G asset amortization is expected to decline double digits YoY in 2013 Assets under BTO agreement (Bt bn) New 2.1GHz Assets Amortization of Asset under BTO agreement (Bt bn) Depreciation of 2.1GHz network CAPEX 29bn 13bn Amortized 0 2012 2013 2014 2015 2012 2013 2014 2015 For indicative purpose only For indicative purpose only 10
Strong capital structure despite the new network investment providing a flexibility for both investment and shareholder return despite a new investment cycle Net cash position average cost of debt at 4% Bt51bn Operating cash flow in 2012 100% Dividend payout Dividend shall not exceed the retained earnings in separated financial statement. 70bn capex for 3 years Finance new capex cycle for long term growth Any cash shortage will be debt financing 11
Marketing strategy the new 3G 2.1GHz services 12
Incentive to use new 3G services Superior network quality Attractive tariffs & Digital life services 2.1GHz 900MHz Provide both high end and affordable 3G devices 2x15MHz larger bandwidth 2x5MHz +15% additional value on voice/data/applications 42Mbps higher max speed 7.2Mbps New digital life services e.g. mpay MasterCard, AIS mpay rabbit, AIS mycloud Seamless migration Fast and Easy through Over The Air process Check SIM/device readiness pressing *570#/*571# Upgrade to 3G 2.1GHz by pressing *988*ID card No.# Customers buying new mobile number do not go through migration process. Convenient channels Assist customers for 3G upgrade e.g. registration, SIM/packages change, 3G devices through various channels AIS 3G centers is now 157 and expand to 1,000 centers by year end. Tesco Lotus chain store expand to nationwide by year end 13
Social Life Fun Life Local Life May 13 May 13 May 13 Jun 13 May 13 Free Google Internet Google Free Search, Chat, Plus Unlimited Social Life FB, Whatsapp, LINE Package mycloud Store your digital assets PhotoBox Discover photos that matter mysticker Shop 1000+ LINE Stickers Music Store (HD) 50k+ HD music & concerts Movie Store (HD) The largest movie store Live TV 30+ Live TV channels Bookstore The largest Thai e bookstore Game Zone Unlimited Game Play Sep 13 Aug 13 Privileges App Discover nearby privileges Guide & Go World first Social Navigator mpay MasterCard Online shopping for everyone mpay Rabbit Bring convenience to mass transit and beyond Calling Post Express feeling on the phone Jun 13 Newsloop Discover the best of Thailand and the world 14
New competitive packages >15% value added on packages Comply with NBTC s price cut regulation More incentive to move to the new 3G 2.1GHz network Focus more on digital life applications Monthly fee (Bt) Voice (mins) Data Throttling Wifi AIS Ebook/Movie (3 months) Sign up bonus (1 months) 299 100 1 st to 6 th month 500MB unlimited 6 th to 12 th month: 500MB 64Kbps AIS Music Store AIS Guide&Go 399 150 750MB unlimited 64Kbps 599 300 1.5GB unlimited 64Kbps 5 E books AIS my Cloud Calling Post 799 400 2GB unlimited 128Kbps unlimited 5 E books 30 movies 999 500 3GB unlimited 256Kbps unlimited 10 E books 30 movies AIS line Premium stickers (1,000+) 15
3G Devices for all segments High end models Samsung Galaxy S4 Bt21,900 SONY Xperia Z Bt20,990 BlackBerry Z10 Bt20,900 Affordable models Nokia Lumia 520 Bt5,850 Samsung Galaxy Y Bt3,290 Nokia 301 Bt2,630 Samsung Hero 3G E3309 Bt1,690 16
Appendix
Consolidated income statement Revenue Bt million/ % to total revenue Revenue 1Q12 4Q12 1Q13 YoY QoQ Voice Revenue 18,702 70.3% 19,014 67.4% 18,737 65.8% 0.2% -1.5% Postpaid (Voice) 4,582 17.2% 4,819 17.1% 4,885 17.2% 6.6% 1.4% Prepaid (Voice) 14,120 53.1% 14,195 50.3% 13,852 48.7% -1.9% -2.4% Non-Voice Revenue 5,973 22.5% 7,225 25.6% 7,687 27.0% 28.7% 6.4% International Roaming 702 2.6% 782 2.8% 659 2.3% -6.2% -15.7% Others (IDD, other fee) 1,216 4.6% 1,185 4.2% 1,383 4.9% 13.8% 16.7% Total service revenue ex IC 26,593 100.0% 28,206 100.0% 28,466 100.0% 7.0% 0.9% Sales revenue 4,636 13.2% 6,068 15.9% 5,152 13.7% 11.1% -15.1% Cost of sales 4,261 12.1% 5,565 14.6% 4,746 12.7% 11.4% -14.7% Net sales 375 1.1% 504 1.3% 406 1.1% 8.3% -19.4% Interconnection revenue 3,948 11.2% 3,908 10.2% 3,874 10.3% -1.9% -0.9% Interconnection cost 3,841 10.9% 3,718 9.7% 3,684 9.8% -4.1% -0.9% Net Interconnection 107 0.3% 190 0.5% 190 0.5% 77.1% -0.2% 18
Consolidated income statement Costs & Expenses Bt million/ % to total revenue Cost of services ex IC 1Q12 4Q12 1Q13 YoY QoQ Netw ork Amortization 3,867 11.0% 3,667 9.6% 3,482 9.3% -10.0% -5.1% Base station rental & utility 800 2.3% 1,021 2.7% 1,055 2.8% 31.9% 3.3% Maintenance 329 0.9% 593 1.6% 381 1.0% 15.9% -35.8% Other cost of services 1,069 3.0% 1,492 3.9% 1,493 4.0% 39.6% 0.1% Total cost of services ex IC 6,065 17.2% 6,774 17.7% 6,410 17.1% 5.7% -5.4% Revenue sharing expense 6,747 19.2% 7,302 19.1% 7,311 19.5% 8.4% 0.1% SG&A 1Q12 4Q12 1Q13 YoY QoQ Marketing Expense 508 1.44% 988 2.6% 706 2% 39.1% -28% General administrative and staff cost 1,872 5.32% 2,417 6.3% 2,068 6% 10% -14% Bad debt provision 128 0.36% 157 0.4% 193 1% 50.1% 22.3% Depreciation 48 0.14% 54 0.1% 55 0% 13.4% 1.7% Total SG&A 2,556 7.3% 3,616 9.5% 3,022 8.1% 18.2% -16.4% % Bad debt to postpaid revenue 1.9% 2.2% 2.5% EBITDA 15,694 44.6% 15,428 40.4% 16,293 43.5% 3.8% 5.6% EBITDA Margin 44.6% 40.4% 43.5% Total financial cost 287 0.8% 258 0.7% 275 0.7% -4.4% 6.6% Net Profit 8,926 8,458 9,923 11.2% 17.3% 19
Financial position Bt-million / % to total asset Cash 4Q12 23,531 23.3% 1Q13 36,737 31.6% ST investment 1,340 1.3% 1,281 1.1% Trade receivable 8,065 8.0% 7,892 6.8% Inventories 1,427 1.4% 1,644 1.4% Others 3,741 3.7% 3,979 3.4% Current Asset 38,103 37.7% 51,533 44.4% License for Telecom 14,577 14.4% 14,336 12.3% Netw ork and PPE 40,297 39.9% 42,426 36.5% Goodw ill 35 0.0% 35 0.0% Intangible asset 2,033 2.0% 2,214 1.9% Defer tax asset 5,314 5.3% 5,020 4.3% Others 609 0.6% 605 0.5% Total Assets 100,968 100.0% 116,169 100.0% Trade account payable 7,341 7.3% 6,166 5.3% CP of LT loans 8,462 8.4% 10,944 9.4% Accrued R/S expense 4,855 4.8% 7,502 6.5% Others 15,630 15.5% 30,515 26.3% Current Liabilities 36,288 35.9% 55,126 47.5% Total interest-bearing debt 20,915 20.7% 24,681 21.2% Total Liabilities 57,426 56.9% 77,566 66.8% Unappropriated Retained earning 17,344 17.2% 12,403 10.7% Total Equity 43,542 43.1% 38,604 33.2% 20
Cash flow 1Q13 Bt. m illion Source of Fund Use of Fund Operating CF before change in w orking capital 16,670 Cash increased 13,492 Proceeds of long-term borrow ings 3,812 CAPEX & Fixed assets 5,976 Interest received 156 Income tax paid 509 Net change in current/long investments 59 Changes in w orking capital 478 Sale of property and equipment 2 Finance cost and finance lease paid 246 Total 20,701 Total 20,701 21
Key financial ratio 1Q12 4Q12 1Q13 Interest bearing debt to equity 0.63 0.48 0.64 Net debt to equity net cash net cash net cash Net debt to EBITDA net cash net cash net cash Total liabilities to equity 1.75 1.32 2.01 Current Ratio 1.04 1.05 0.93 Interest Coverage 42 46 45 DSCR 7.4 5.0 4.3 ROE 95% 85% 97% 22
Disclaimers Some statements made in this material are forward looking statements with the relevant assumptions, which are subject to various risks and uncertainties. These include statements with respect to our corporate plans, strategies and beliefs and other statements that are not historical facts. These statements can be identified by the use of forward looking terminology such as may, will, expect, anticipate, intend, estimate, continue plan or other similar words. The statements are based on our management s assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Please note that the company and executives/staff do not control and cannot guarantee the relevance, timeliness, or accuracy of these statements. AIS INVESTOR RELATIONS http://investor.ais.co.th investor@ais.co.th TEL. +662 2995014 23