Thursday, November 27, 2008

Sri Lanka Telecom earnings fell 31 per cent on stiff competition

Sri Lanka Telecom Ltd (SLT) - which Malaysian billionaire T. Ananda Krishnan indirectly controls more than 35 per cent - saw its Q3 net profit down by almost one-third after reducing call rates at its mobile phone unit (Mobitel).

Mobitel is trying to close its gap with Dialog Telekom Ltd (controlled by TM International), by offering cheaper packages for state workers.

It is also investing heavily to expand its network. In September, it borrowed US$45 million, part of it will be used to fund its high-speed network expansion outside Colombo.

Net profit dropped to 1.24 billion rupees during the quarter, against 1.8 billion rupees a year ago.

Global Telecommunications Holdings NV, a subsidiary of Usaha Tegas Sdn Bhd, owns over 35 per cent in SLT. The Sri Lankan government also owns 49.5 per cent in SLT.

Analysts' reaction on TMI

While most of the bad news (such as the higher finance cost, losses in Sri Lanka and Bangladesh operations, lower Ebitda margin) have been factored-in by analysts and investors, they are still cautious on how TMI's new capital structure would be.

Among main concerns: will the new structure result in any dilution? if yes, by how much? will the new structure be able to accommodate its expansion plan in Iran?

TMI - which just announced that it has received the green light to bid for a mobile license in Iran via a consortium - said it will announce the structure early next year.

Several analysts have either lowered its target price or downgraded its recommendation. Citigroup, for example, has cut TMI's target price from RM5.40 to RM4.50. Target price ranges from RM3.49 (Affin) to RM7.50 (credit suisse).

Wednesday, November 26, 2008

TMI third quarter net profit fell ...

TMI's Q3 net profit fell by more than 25 per cent, mainly due to the lack of one-off gains and higher finance cost.

No foreign exchange losses for TMI
Unlike sister company TM, TMI's weaker Q3 numbers were not due to foreign exchange losses, thanks to its hedging policy (at subsidiary level).

TMI, at group level, does not have any foreign debt. Its subsidiary PT Excelcomindo (XL) has USD debts, it was understood that half of XL debts are hedged.

Celcom vs DiGi in Q3 and YTD.

Q3 Revenue: Celcom RM1.42 billion (+10% yoy), DiGi RM1.22 billion (+10% yoy).
9-month Revenue: Celcom RM4.135 billion (+10% yoy), DiGi RM3.58 billion (+12.5 % yoy).

Q3 Net Profit: Celcom RM327m (+25% yoy), DiGi RM270m (-1% yoy)
9-month Net Profit: Celcom RM958m (+28% yoy), DiGi RM858.4m (+11.5% yoy)

Q3 Net Addition: Celcom +360k (+126k postpaid, +234k prepaid), DiGi +166k (+126k postpaid, 40k prepaid)
9-month Net Addition: Celcom +1.05m (+309k postpaid, +742k prepaid) DiGi +394k (+270k postpaid, +124k prepaid)
YTD subscriber growth: Celcom + 14%, DiGi +6%
YTD postpaid subscriber growth: Celcom +24%, DiGi +38%

Ebitda margin: Celcom 45.3%, DiGi 42.7%

Postpaid ARPU: Celcom RM102, DiGi RM89
Prepaid ARPU: Celcom RM47, DiGi RM54

Finalising capital structure

Currently, TMI’s balance sheet carries short term debts amounting to RM10.45 billion which is due in 2009. This includes the RM6.45 billion bridging loan for the acquisition of Idea and the RM4 billion outstanding to TM. TMI has decided on a two-pronged approach to address this via a short term solution and a longer term one.

The Group will prepay RM2 billion in respect of amount owed to TM via a new banking facility that matures at the end of 2011. The remaining RM2 billion will be repaid via internally generated funds in accordance with the terms of the demerger due in April 2009, which will also result in lower interest cost for the Group.

The RM4.85 billion bridging loan has been converted to a 3 year term loan, maturing in 2012. The Group is currently in negotiations to term out the remaining USD500 million (RM1.6 billion) to 2012. The Group has been able to address the short term refinancing risks despite current weak credit market.

With the terming out of the short term debts, TMI is concurrently looking to achieve an optimal capital structure through equity or equity like instruments. It is the intention of TMI Group to utilise the new capital to reduce the overall debt position within the 3 year period. Due to the multiple options available to TMI the Group expects to finalise the structure by 1Q 2009.

Sunday, November 23, 2008

Market penetration rate in Asia Pacific and Middle East.

Came across two maps as I was going through the brochures I collected during Mobile Asia Congress 2008. The maps highlighted the Asia Pacific's and Middle East's mobile coverage (for both 2G and 3G). As in turn out, most of the countries in AsiaPac are still on 2G network.

Below are the mobile subscriber base and market penetration details on countries in AsiaPac and Middle East's:

Asia Pac
1. Australia 22.45m (108 per cent)
2. Bangladesh 47m (29 per cent)
3. Bhutan 0.13m (5 per cent)
4. Brunei 0.37m (94 per cent)
5. Cambodia 3.19m (20 per cent)
6. China 611.05m (46 per cent)
7. Cocos (Keeling) Islands <0.01m
8. Cook Island 0.01m
9. Fiji 0.63m (72 per cent)
10. French Polynesia 0.19m (72 per cent)
11. Guam 0.14m (80 per cent)
12. Hong Kong SAR 9.13m (125 per cent)
13. India 318.4m (28 per cent)
14. Indonesia 116.52m (50 per cent)
15. Japan 104.85m (82 per cent)
16. Kiribati <0.01m (1 per cent)
17. Laos 0.83m (13 per cent)
18. Macau SAR 0.93m (178 per cent)
19. Malaysia 24.38m (88 per cent)
20. Maldives 0.33m (89 per cent)
21. Marshall Islands <0.01m
22. Fed' Stats of Micronesia 0.02m
23. Mongolia 1.3m (49 per cent)
24. Myanmar 0.08m (0 per cent)
25. Nepal 1.93m (7 per cent)
26. New Caledonia 0.12m (49 per cent)
27. New Zealand 4.63m (111 per cent)
28. North Korea <0.01m
29. Northen Mariana Islands 0.04m (52 per cent)
30. Pakistan 92.62m (54 per cent)
31. Palau <0.01m
32. Papua New Guinea 0.08m (1 per cent)
33. Philippines 65.86m (74 per cent)
34. Samoa 0.05m (26 per cent)
35. Singapore 6.31m (173 per cent)
36. Solomon Islands 0.02m (4 per cent)
37. South Korea 45.38m (94 per cent)
38. Sri Lanka 9.93m (50 per cent)
39. Taiwan 23.38m (101 per cent)
40. Thailand 60.6m (95 per cent)
41. Timor-Leste 0.12m
42. Tonga 0.04m (33 per cent)
43. Vanuatu 0.03m (15 per cent)
44. Vietnam 53.29m (62 per cent)

Middle East
1. Algeria 31.09m (91 per cent)
2. Bahrain 1.1m (138 per cent)
3. Comoros 0.63m (72 per cent)
4. Djibouti 0.07m (10 per cent)
5. Egypt 36.73m (51 per cent)
6. Iran 44.39m (61 per cent)
7. Iraq 14.63m (51 per cent)
8. Jordan 4.99m (82 per cent)
9. Kuwait 2.92m (108 per cent)
10. Lebanon 1.37m (35 per cent)
11. Libya 9.56m (157 per cent)
12. Mauritania 1.81m (55 per cent)
13. Morocco 23.89m (73 per cent)
14. Oman 3.06m (94 per cent)
15. Palestinian Territory 1.29m (21 per cent)
16. Qatar 1.2m (184 per cent)
17. Saudi Arabia 31.55m (120 per cent)
18. Somalia 0.3m (3 per cent)
19. Sudan 9.91m (27 per cent)
20. Syria 0.95m (35 per cent)
21. Tunisia 8.71m (84 per cent)
22. UAE 9.45m (186 per cent)
23. Yemen 5.5m (23 per cent)

Stats provided by Wireless Intelligence, as at Q3 2008.

Thursday, November 20, 2008

Malaysians spend a lot on voice call and text messages. Myth or Truth?

Well, well, well. It turns out average Malaysians spend more on phone bills and reload coupons, as compared against users in China, Thailand, Indonesia, the Phillipines.

Based on Wireless Intelligence stats, Malaysia ranks 9th in terms of ARPU (average revenue per user) in Asia Pacific, probably ranks 2nd behind Singapore. Average mobile phone users in the country spend US$15.34 a month, on phone bills and reload coupons.

So, which Asian country has the highest ARPU? Here's the top 10:

1. Japan US$50.76
2. South Korea US$43.58
3. Australia US$37.34
4. Singapore US$30.30
5. Macau US$27.43
6. New Zealand US$22.98
7. Taiwan US$22.62
8. Hong Kong US$19.08
9. Malaysia US$15.34
10. China US$9.15

Here's an interesting finding: Japan and South Korea, the two highest ARPU countries in Asia Pacific, are mainly made up of postpaid subscribers. In Japan, 97.6 per cent of users are on postpaid, while in Korea, is 99.3 per cent!

As for Macau, which ranks 5th, with an ARPU of US$27.43 (about 35 per cent more than Malaysia ARPU), is mainly made up of prepaid users. 87.6 per cent of Macau mobile users are on prepaid. I believe, the fact that Macau, being one of the top tourists' destination, does help drive higher ARPU and prepaid segment.

I was in Macau for 6 days, and i have spent almost US$90 on a prepaid starter pack, reload coupons. Prepaid registration is not implemented in Macau, making tourist's life much easier when comes to purchasing a prepaid starter pack. I bought mine for HK$100, it comes with HK$130 worth of credit.

Enough about Macau for now. Back to the Asia Pacific findings.

Overall, ARPU in Asia is declining, as competition forced mobile operators to lower their tariff. Asia Pacific ARPU was about US$25 in Q1 2006, today, it is below US$20 in Q4 2007. ARPU sank further in 2008, by another 10-15 per cent so far this year.

At first, I thought that another reason that could reduce ARPU is that consumers are cutting down on voice calls and SMS, as a result of lower disposable income. However, the stats showed otherwise, Asia Pacific AMPU (Average minute per user) has grown by about 10 per cent between Q106 and Q407. Asia Pac AMPU for 2008 is not available.

A glimpse of the Asia Pacific mobile industry

Below are some key Wireless Intelligence stats of most Asian countries' telecommunications sector, in particularly the mobile industry.

As at Q308:

1. Japan
mobile subscribers: 104.696 million
Ebitda margin: 36.2 per cent

2. South Korea
mobile subscribers: 45.429 million
Ebitda margin 22 per cent

3. Australia
mobile subscribers: 22.45 million
Ebitda margin 29.5 per cent

4. Singapore
mobile subscribers: 6.307 million
Ebitda margin: 34.5 per cent

5. New Zealand
mobile subscribers: 4.628 million
Ebitda margin - N/A

6. Macau
mobile subscribers: 928k
Ebitda margin: 42.7 per cent.

7. China
mobile subscribers: 611.054 million
market penetration: 45.5 per cent

8. India
mobile subscribers: 313.793 million
market penetration: 27.5 per cent

9. Pakistan
mobile subscribers: 92.616 million
market penetration: 53.8 per cent

10. Vietnam
mobile subscribers: 53.294 million
market penetration: 61.5 per cent

11. Bangladesh
mobile subscribers: 47.001 million
market penetration: 29.3 per cent

12. Thailand
mobile subscribers: 60.598 million.
market penetration: 94.9 per cent

Market Insights

Here's some key stats on the mobile industry as of Q3 2008. I must admit that some of these numbers are surprising.

Let's start with the net additions for the key Asian countries. China and India signed up 25.7 million and 22.1 million new subscribers during the third quarter 2008, they now have 611.1 million and 313.8 million mobile customers respectively. Penetration rate is about 45.5 per cent (China) and 27.5 per cent (India).

Pakistan, Vietnam, Bangladesh makes up the top five net additions market -- with 5.9 million, 4.2 million and 3.3 million respectively.

Thailand, Philippines, Japan, Sri Lanka, South Korea added 2.6 million, 2.3 million, 1 million, 668k and 446k new users respectively.

In terms of year on year subscriber growth rate, Vietnam tops the list with 56 per cent growth, followed by India (48 per cent), Bangladesh (48 per cent), Cambodia (39 per cent), Sri Lanka (39 per cent), Indonesia (38 per cent), Pakistan (32 per cent) Laos (30 per cent) Philippines (29 per cent) and Samoa (29 per cent).

Malaysia - thanks to all the stiff competition among Maxis, Celcom and DiGi, resulting to lower call rates and affordable prepaid starter packs - ranks 9 in terms of mobile penetration rate, with about 88 per cent, ahead of Japan (82 per cent), Vietnam (61.5 per cent), Pakistan (53.8 per cent), and Bangladesh (29.3 per cent).

Macau ranks number 1 with a mobile penetration rate of 176 per cent, followed by Singapore (173 per cent), Hong Kong (125 per cent), New Zealand (111 per cent), Australia (108 per cent), Taiwan (101 per cent), Thailand (95 per cent), South Korea (94 per cent).

Clearly, there's still plenty of room to grow for the Malaysian telecommunications industry. These stats are provided by Wireless Intelligence.


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