True Corporation Public Company Limited (TRUE) Earnings Call Transcript

Good morning, everyone. Welcome to True Corporation Opportunity Day with SET for the second quarter of 2026. My name is Naureen. I'm the Head of Investor Relations, and with me is our CFO, Nakul. I will request from the host to start our presentation.

[Foreign Language]. Good morning, everybody. Let me start the presentation for Q2 with the results that we just announced yesterday. In terms of the key highlights for this quarter, we have a service revenue growth of 0.8% on a year-on-year basis, first time after many quarters, we are back to growth and also a 0.8% quarter-on-quarter growth as well on service revenue. If you look at our EBITDA, it's grown 13.5% from last year's same quarter and also Q-on-Q growth of 1.1%. As far as profit is concerned, we have the sixth consecutive quarter of profit for of operation at THB 6.6 billion, with an increase of 3.2x since the same quarter last year. The leverage is 3.7x, which has reduced 0.3x as compared to the same quarter last year and also 0.1x from the previous quarter. And last but not the least, the Board of Directors have approved an interim dividend of THB 5.2 billion, which is THB 0.15 per share and a payout ratio on consolidated profits of 79%. Let me just explain the performance a little bit. Why we say that the top line has improved in first time after many quarters is what you can see from the slide. If you see Q1 '25 until Q3 '25, our top line was in a decline. And it was a 0.6% decline in Q1 '25, 0.5% decline in Q2, and a decline in Q3 as well. And since then, as we had committed to the capital markets, we will be back to growth. And that's what you consistently see in our performance since Q4 of 2025. And this is quarter-on-quarter growth. Of course, for Q2 '26, we do register a year-on-year growth as well, but 0.7% growth in Q4, a 0.2% growth Q-on-Q in Q1 and another 0.5% growth in Q2 '26. We are saying that we are back to growth. And this is on the back of good recovery that has happened in the mobile business and the online business with softer development in B2B as well as the Pay TV. And Pay TV, as you already know, was already expected. Then as far as profitability is concerned, with the disciplined OpEx that we have seen since amalgamation, where the cost has reduced significantly we have shown EBITDA growth consistently over this period as well. So barring Q2 2025, where there was a decline in EBITDA. Every quarter since amalgamation, we've registered a quarter-on-quarter growth in EBITDA and that's something that makes us very proud. So much so that in Q2 of '26, we have registered a 1.1% growth in EBITDA as well. Total EBITDA growth year-on-year is 13.5%. And while the costs are very well controlled. The top line is weak in terms of the B2B business, we have revised the guidance on the top line to 1% to 2% of growth, but maintained the good development of the OpEx and hence, the EBITDA growth of 7% to 9%. Then just wanted to focus a little bit on the execution and transformation amidst the macroeconomic uncertainties. You're aware that there have been uncertainties in the geopolitical situation globally and also on the macroeconomic front as well. The tourist arrivals are actually 5% lower on a YTD basis. And since, we have a higher market share on tourist and the migraine. It has impacted us more than the competition. The geopolitical and global supply chain uncertainties also persist. Having said that, we have shown that there is discipline in terms of how we can mitigate those risks, which has been seen from the good development on the EBITDA. Also, the macro backdrop is improving as the government has increased the forecast as far as the GDP growth is concerned. And with our efforts on proactive cost and risk mitigation, ongoing negotiations with our vendors, we are confident that we can deliver the EBITDA growth that we have set out for the year at 7% to 9%, and we are focused on building the resilience that our business needs. With this, I hand over to Naureen to take over some financial numbers, please.

Thank you. SP1 Thank you, everyone. Thank you, Nakul. Let me start with service revenue first. On service revenue, as you can see, we have improved 0.8% year-on-year and quarter-on-quarter, as Nakul has just mentioned. This is our return to year-on-year growth after a few quarters, as Nakul has already shown you. For a quarter-on-quarter level, our service revenue improvement comes from all the business segments. You can see there is growth in mobile, broadband and TV as well. On a year-on-year level, if you look at the graph in the center, you can see that the improvement in service revenue is actually a healthy contribution from mobile and also a contribution from broadband. We are partially offset by the decline in the TV business. On the total revenue level, the decline that you see of 7.5% year-on-year is mainly because the domestic roaming revenue that we used to get I'm sorry, the spectrum arrangement revenue that we used to get from MT is no longer there since August 20. So this is a well-known fact. This is part of the arrangement that comes because of the acquisition of spectrum. So the revenue is not their cost is also not there. We have a benefit to EBITDA. So that is the main reason that you have a decline in the total revenue. On a quarter-on-quarter level, the decline in the total revenue mainly comes on account of the lower handset sales. Quarter 2 is not a sales season for us. iPhone launches in quarter 3 than quarter 4 but for [ Quarter 1 ], we have good growth. supported is not a handset sales season. Let me move on to the mobile business specifically. If you see, we have a 1.6% growth year-on-year. And even though the NT domestic roaming revenue here, which is on the top part, has declined significantly year-on-year. If we normalize for the decline in antidomestic roaming revenue, we actually have a growth of 2% year-on-year in mobile. On a quarter-on-quarter level, we have a 0.6% growth, which is mainly coming ND you can consider to be not there anymore. And it's basically coming on account of the improvement we have in the business. We have a subscriber growth of 1% in mobile overall, of which 407,000 came from prepaid and 71,000 was a net addition in postpaid. And on a quarter level, we also have a decline in our churn in the prepaid side. On ARPU, as you would have also seen during the first quarter, we participated in the Ministry of Education study anywhere, anytime program, where we are giving out SIM cards to educational institutes, which are a low-priced SIM card. These are postpaid SIM cards. As a result, we have growth in subscribers. But because the value of the SIM card is lower, our ARPU is diluted. So it happened in quarter 1. It happened again in quarter 2. Additionally, on the prepaid side, we have 2 external impacts. One is because of the government of city Taihe. A lot of customers reactivated their connections during May.or activated a data connection or we're not using our connection much and has reactivated because they need an active data connection to use the [ Thaihot Thai ] app. On that account, we gained back some customers who are low ARPU users. Additionally, there is a regulation by the NBTC, which was effective from 14th of May where any prepaid customer who has at least 3 both balance in their SIM card will be considered an active subscribers. So both of these are low ARPU customer acquisitions, which are diluting our prepaid ARPU overall. And therefore, you see the blended ARPU declining. This is overall overview on the mobile side of our business this quarter. On the broadband side, we have a growth of 1.7% on revenue this quarter, which is coming on account of the B2C growth. Our ARPU has improved 6 and a part of this is also coming from the MyPlan that we launched earlier this year, which is giving us almost 50% acquisition these days as well as driving up ARPU by about 23% for the quarter. Our subscriber growth is 0.8%. This is 28,000 on a Q-on-Q level. We also did a healthy growth last quarter. On the TV side, on a year-on-year level, we have a decline mainly on account of no EPL. Also, there are lower seasonal concerts on a year-on-year level. On a Q-on-Q level, we had seasonal concerts, which is the reason that you see an improvement in the revenue in the quarter. Subscribers continue to decline. We have about 3.7% decline this quarter, and there is a marginal improvement in the ARPU as well. On OpEx, we have a decline of 28.7% year-on-year, and this is mainly on the payment that we were making to NP as part of the spectrum arrangement which has gone away as well as synergy benefits. On a quarter-on-quarter level, we have a few items this quarter. One is we had a onetime benefit on regulatory cost.which is amounting to a 6.4% decline in the regulatory cost this quarter. Network cost is benefited because we have lower number of towers on a year-on-year level. And during this quarter, we have made some negotiations with our vendors, leading to a reduction in prices, which you see coming in the OpEx line for network. Cost of sales is related to handset sales, and this moves in tandem with the handset sales. So lower sales results in lower cost here. On SG&A, we have a slight increase quarter-on-quarter. This is because we spend on some marketing campaigns. We have had some events that are happening. We've participated. We brought back Academia Fantasia, which is a very popular content. As well as we sponsored the voice, which is a musical program that also happens in the quarter. On this -- this is the biggest item that I've already mentioned, the spectrum rental cost, which is eliminated as of third August last year. So it will be normalizing out very soon. On other cost of providing services, we have a slight increase, which is related to the concepts on the TV side, I just mentioned to you. So the concert is coming back and there's marginal costs related to that. Overall, our OpEx, excluding D&A declined 4.4% on a Q-on-Q level. Moving to EBITDA, we have a growth of 13.5% and A part of this is coming because of the spectrum arrangement, but another part of this is also driven by our synergies, our top line improvement and the cost discipline that we are showing in the business. This is our highest ever EBITDA since amalgamation, which is a 46% growth if I compare versus quarter 1 of 2023, which was our first quarter after amalgamation. Our EBITDA to service revenue currently stands at 68.5%, which is also an all-time high for us. It has improved 7.6 percentage points from last year and 0.2 percentage point from last quarter. With this, I hand -- sorry, let me just finish this one. On net profit, we are registering a reported profit of THB 6.6 billion, which slide has not changed. On net profit, we are reporting THB 6.6 billion , which is flat quarter-on-quarter. But on a year-on-year level, it is a 3.2x improvement. We have a onetime effect this quarter. We have details of this in our MD&A. So if we normalize for the onetime initiative, which is THB 0.2 billion, our reported profit is actually landing at around THB 6.7 billion, which is a growth quarter-on-quarter. And if we also normalize for the onetime in quarter 1, 6.5 million goes up to 6.7% for the second quarter. In the other items, we also have financial costs, which decreased both year-on-year and quarter-on-quarter because we have an improvement in effective interest rate, which I will show you in the next slide. Our depreciation and amortization increased 5.2% because, first, we have an acquisition of spectrum, which you are aware of, we did last year in June. And we have new CapEx investment that we are also making which is affecting depreciation. For the second quarter, our CapEx investment has been THB 4.6 billion, which is -- we are roughly landing at about 10% CapEx to sales ratio. On the CapEx that we spent during the quarter, about 45% went into our mobile network business. Our 35% went into broadband, which includes the B2B investment and the remaining is in IT and the other parts of our business. On leverage, as Nakul has already mentioned, we have a 0.3x reduction in leverage. This is driven by our improvement in EBITDA. On effective interest rate, we have a reduction of 0.4 percentage points, 4% went down to 3.6%. This is because of effective debt management. We have exercised calling callback options on debentures as well. and overall, an improvement in the business. For third quarter, in fact, earlier this week, we have launched a new set of debentures at THB 16.5 billion -- of THB 16.5 billion at a weighted average interest rate of 2.6%. And with this, I hand back to Nakul to walk you through our dividend.

Thank you, Naureen. For the second quarter of '26, the Board of Directors has approved an interim dividend of THB 0.15, which is THB 5.2 billion at a payout ratio of 79% of the consolidated profits of the company. The record date for the dividend is 18th of August, and the payout is going to happen on second of September. And this is the second consecutive dividend for the year that we have announced. One was in the previous quarter at THB 0.14 to and now THB 0.15 for Q2. Then just to give you an overview of the year-on-year development of our numbers, which is first half of '26 as compared to first half of '25. If you see on the top line, especially the service revenue, there is an increase of about 0.1%. Normalized for NT domestic roaming, it's 0.5%. The OpEx is down 29% on a year-on-year basis for first half of '26 versus '25. And as a consequence, the EBITDA has improved to 12.2% year-on-year. The profit improvement on a reported basis is actually 9.5 billion for the same period. So now profit for 6 months is basically [ THB 14.3 billion ]. And this basically takes me to the last slide, which is on the guidance. If you look at the guidance that we had communicated to the capital markets in the beginning of the year was a service revenue growth of 2% to 3% and EBITDA growth of [ 7 to 9 ] and a CapEx spend ranging between THB 25 billion to THB 27 billion. As we stand today, we believe that there is a need to revise the guidance on the revenues to 1% to 2%, keeping in mind the macroeconomic uncertainties, the lower arrival of products and the slowness in the growth of the B2B business. So 1% to 2% is the growth that we are expecting on the service revenues. However, because of the good cost discipline, the optimization of spends that we have done so far and how we will manage to drive this macroeconomic uncertainty, the EBITDA guidance is remaining unchanged to 7% to 9%. CapEx spend will still be THB 25 billion to [ THB 27 billion ]. With this, I will wrap up the presentation and hand it over for the Q&A, please. Thank you.

Thank you, Nakul. We already have a set of questions. Let me start with the first one. Understanding that the company gave out dividends from retained earnings stand-alone financial statements, how do you sustain the dividend paid given that stand-alone net profit is negative THB 255 million in 2Q? I don't believe that's correct. But let's just answer the dividend payment.

So I don't think the profit is negative THB 255 million maybe the number can be checked. But we declared dividends considering the consolidated profits of the company as a policy the company sales like based on consolidated profits, the dividends are going to be declared. But the payout, of course, happens on the stand-alone entities. And I think that's where you were referring to that a stand-alone true operation is sitting at some reserves of about THB 15-odd billion. The dividend is actually going to be paid out on that. What I'm going to clarify is that the subsidiaries and specifically the main subsidiary of the company, which is DUC, which has the mobile business that's there is significantly profitable. The profit is in upwards of THB 6 billion. Of course, the consolidated company is a combination of many, many, many subsidiaries. The biggest one is already profitable. So as and when there is a need, we will upstream the dividend from the subsidiary to the plant company to make sure that there is sufficient reserves available at the consolidated level or at the parent level to pay the dividend. So please be rest assured that the subsidiaries are already profitable and upstreaming dividend to the parent company is not a problem.

I'd just like to correct that there is actually a profit for second quarter on a stand-alone basis. The next question is, is Pay TV business profitable? How much after cost is pay TV?

Pay TV business on a stand-alone basis, we don't disclose it, but in general, it's kind of a breakeven. I mean -- as far as the contribution to the margin, of course, it's quite low as compared to the other businesses because of significant investment that is done on the content side. Of course, we know that linear TV has been on a decline over the last many, many years. because the shift is actually a pivot towards the OTT. And that's exactly what we have been focusing on. We are trying to move towards OTT business. And for that, with the TrueID, which is our flagship platform where we show the short-form content to our consumers, we have launched a product called a which basically is a short-form videos that the customers can enjoy actually a plus or a content that is available for them to work, and our intention is actually to monetize that. The contribution of Pay TV business to the OpEx of the company, we don't disclose. But yes, I mean, we are trying to favor the words moving from linear to OTT and we expect that over a period of time, the decline in linear business is going to offset the growth in the digital. And for that, provide is one example. And of course, we also sell the long-form content as well to a different platform, which is CVS now.

Thank you, Nakul. There is a similar question on Pay TV already, so we are not going to answer that one. This one is a number of questions. So let me go one by one. What are True's top strategic priorities for the next 12 to 24 months? What will be the key growth drivers for True in the second half of this year and beyond? There's more, but let's take these 2 first.

Okay. In terms of the top priorities, I think we disclosed that in the previous quarter, but just to give you some brief on that. We have big moves as part of our strategy for the next 3 years. move. The first big move is basically big moves on growth. This is a big move on experience. There is a big move on AI and of course, on the people as well. As part of the strategy on experience, I think because we have a network leadership in the -- or we have a spectrum leadership in the country, we have 30% higher mid-band spectrum as compared to our competition. and also the fact that we are leasing the networks of reuse because of the good spectrum that we've had. We intend to monetize the spectrum leadership to give a better experience to our customers. And one example from that is, from a year-on-year basis, there is roughly a 20% increase in data consumption. This data consumption is coming on the back of an excellent network that we provide to the customers today. Of course, now what remains to be seen is how we can monetize this increase in the data consumption that we have seen and a lot of measures on the pricing front are going to be taken to make sure that we can monetize this. Big moves on growth here. I give you one example on what we are doing on TrueID, which is the [ Tata ] short-form drama that we launched. Another example that we've done is, I think Naureen explained, is the MyPlan that we launched on online business. This is new price plans that we launched in March this year, which are basically modular prices. So there is a base plan and if the consumer wants to get a better speed then they need to top up or they need to increase the price level that they are paying to. If they want to access more content, they need to pay something more to us. If they want to access the home solutions that we offer to the customers, which is basically the pet solutions that we have, the AI cameras that are there, AI speakers that are there and all kinds of home solutions, they need to play something. These products are now contributing 50% of our ARPU -- of our gross adds in a quarter. And the ARPU from these products is 23% higher than the normal products that we were seeing previously. So this is another example of how the big moves on growth with specifically to the online business has actually great dividend for us. Going forward, I'm also punches of time here. The focus that we will have is to make sure that we capture the fair share of growth in the market. If you see the Q1 performance, our growth in mobile business was pretty much in line with the competition. Of course, we lag as far as growth on online is concerned. And we expect to address that with the launch of the new products, and I'm talking and the improvement in the network as well. Cost efficiency is in our DNA as we have shown in the past so many quarters since amalgamation, and that's going to continue to be something that we will focus on. using artificial intelligence, we believe that there is scope for more efficiencies into our company. We had 18,500 people at the time of amalgamation. Now we are a share less than 10,000 and we believe there is an opportunity to be more efficient in terms of how we can organize our company and the workforce as well by consolidating the ID systems as well. So overall, focus should be growth in the top line, which should be equal or slightly better than the GDP growth. And of course, if you are able to meet, keep our OpEx flat, that means we will reduce our nonrevenue-generating OpEx by fueling growth with the revenue generating if you're able to keep the OpEx flat, then there is going to be a higher growth in EBITDA. The mantra for our company will be to grow EBITDA faster than the revenue as what we've demonstrated over the last 3 months. Sorry for a long answer, but I think if you talk about strategy, and I'll need to explain this as stated.

Actually, you answered the next 4 questions already. Thank you for that. Let me move on to then the last question. What is the company's current market share in the B2B enterprise segment? And how does it plan to increase that share?

I briefly mentioned about the fact that growth in B2B business has not been as per our expectations. And that's probably because of the macroeconomics and the geopolitical situation, of course, in the industry a B2B as a percentage of total revenues, our total service revenues is roughly 8% to 9%. And this is consistent with the industry as such. So I mean, both the operators in the industry are having roughly 8% to 9% of the contribution of B2B to the total revenues. And this is something that if you compare it with the regional bema in more mature markets, there are upwards in the mid-teens and the high teens, 15% to 20%. We believe that Thailand in the long term or the mid- to long term can reach those percentage levels. Of course, technique reach an inflection bond, where the focus of all the operators or at least our company should move from offering only connectivity to beyond connectivity services to our customers as well. And it includes offering anything as a service, whether it is IT platforms, whether it is software as a service or whether it is data as a service, those kind of products along with connectivity products as well, 5G private network and so on and so forth. So this is going to be the next wave of growth that will happen over a period of time. Of course, this requires us to build partnerships with other companies as well because we cannot at those kind of products and start selling because it takes a long on time. So that's why the partnership model becomes very crucial as we start delivering. As you also know that Rio has a data center business will and we partner with the rise or that company for TrueID C to resell the data center space. So of course, we do not make much investments into the data center, but we are able to monetize those investments by charging a small margin as we resell those products to the customers as well. So that's also going to continue to go on as well. So overall, B2B is 8% to 9% of the total revenues as an industry as such, and there is an opportunity over the mid- to long term to leads to the mid-teens there. And that's what is going to be the focus as far as the strategy for us is concerned over the next 3 years.

Thank you, Nakul. Can you please explain again why NBTC policy of THB 3 to keep them activate have an effect on number of subscribers.

So this is basically the definition of subscribers for us. I mean, as per definition, subscribers are active if they do a revenue-generating activity in the last 90 days. And if you are able to deduct the [ THB 3 ] from a customer's balance. So here, we are assuming customer already has a balance in the account. But the validity of the SIM has expired. Historically, that was not counted as a customer. So because the customer has a balance and we can return the [ 3 months ] to our customers account and that becomes a revenue-generating activity. Our customer becomes an active customer. And the moment a customer becomes an active customer, it is counted as a subscriber, but the ARPU from the customer is only THB 3 . So that's why the subscriber base increases, but the ARPU goes down because the incremental revenue that we get from the customer is very low as compared to the normal ARPU that we have.