Thaicom reports net loss of B2.65bn for 2018 Q4

The country’s sole satellite service provider Thaicom Plc reported a net loss of 2.65 billion baht for the fourth quarter of 2018, owing to asset impairment loss of 2.3 billion and a bad debt provision of 216 million.

The company booked total revenue for the quarter of 1.5 billion baht,

0.1% down from the third quarter of

2018, but a 31.5% decrease year-onyear because of the sale of its subsidiary CS Loxinfo’s (CSL) stake of 42% to Advanced Info Service in the fourth quarter of 2017.

Full-year revenue was 6 billion baht, down 37% from 9.5 billion in 2017.

Pisut Namvijitvong, a senior analyst from Kasikorn Securities (KS), said stripping out CSL revenue, Thaicom’s broadcast revenue in the fourth quarter last year grew 2.3% year-on-year, while broadband revenue expanded 8.8%, a sign operations have stabilised after it lost several customers over the past three years.

Thaicom’s total revenue in the last quarter of 2018 was 1.5 billion baht, with 889 million from broadcast satellite business and 544 million for broadband satellite business.

Compared with the third quarter of 2018, revenue from the broadcast satellite business in the fourth quarter declined 1%, but revenue from the broadband satellite business grew 2%.

The KS analyst said Thaicom’s balance sheet was strong, with a net cash position in the fourth quarter of 2018. However, return on investment capital was somewhat subdued as it has struggled to settle regulatory disputes with the government.

There is still no clear resolution for an extension of the life of its satellite, the launch of replacement satellites for Thaicom 4 and 5 satellites and the ownership dispute regarding Thaicom 7 and 8.

Thaicom operates two satellites under a revenue-sharing concession regime: Thaicom 4 broadband satellite and Thaicom 5 broadcasting satellite. The concession will expire in 2021.

Thaicom also operates Thaicom 7 and 8 under a single licence from the National Broadcasting and Telecommunications Commission (NBTC).

Previously, the government forced Thaicom 7 and 8 to return to the old concession system instead of a licensing regime, saying the existing 5.75% licence fee payment was too low compared to the 20.5% revenue sharing of the concession regime.

Meanwhile, the NBTC will soon take over regulatory control. It is set to scrap the current operating fee structure by June for satellite businesses and regulatory conditions that govern operating and landing licences.

Mr Pisut said KS maintains its underperform outlook on Thaicom stocks price with an unchanged 2019 estimated.

Potential catalysts to lower the rating are: revenue pressure from local customer churn and ongoing price discounts to retain customers, an indefinite timeline to resolve several disputes with the government to unlock concern over THCOM’s business continuity, and an unfavourable risk-reward payoff.