Q1 2007 Advanced Info Service PLC Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning to all. Welcome to Advanced Info Service first quarter 2007 results conference call. [OPERATOR INSTRUCTIONS]. I would like to hand the call over to our call leader, Mr. Pornrat Janejarassakul and I'll be standing by for the Q&A session. You may now begin, sir. Thank you.

PORNRAT JANEJARASSAKUL, HEAD OF MANAGER, ADVANCED INFO SERVICE PLC: Thank you. Good morning everybody. Thank you for joining us in [this quarter]. I'm Pornrat and that's my colleague [inaudible] and then [inaudible] will join us as well. I will go straight to Q&A right away at this time.

OPERATOR: Thank you. We will now proceed to a Q&A session. [OPERATOR INSTRUCTIONS]. We have a first question coming from [Sachen Jalyowger] from Lehman Brothers. Please go ahead, sir.

SACHEN JALYOWGER, ANALYST, LEHMAN BROTHERS: Hi. This is Sachen Jalyowger from Lehman Brothers. Thanks for the call. I have two questions. First, any color on when you will start booking the interconnect revenues, any progress on TOT, on talks with TOT on that?

And second, any guidance for the IDD revenue? How much revenue do you intend to book for '07 and what is the targeted market share in that market? Thank you.

UNIDENTIFIED COMPANY REPRESENTATIVE: On the interconnection, we still have not booked anything in first quarter. We don't know yet for the second quarter if we will have the IC bookings. The progress is that we're still in talks with the TOT but TOT has not yet get back to us whether they will approve interconnection. The thing is with the interconnection is that interconnection to TOT is like a new service to AIS, so any new service that we want to do based on the original contract, we need approval from TOT. We have asked TOT on this and TOT will need to get back to us. We can't say yet if in the second quarter there will be an interconnection booking into our balance sheet or income statement.

On the second question, guidance on IDD revenues. We expected to see an increase in bottom line around 1 to 2%. In terms of pricing we still have the same pricing as what CAT is doing as its tariff in the market. I don't think we expect to see a high increase in the market share with -- in the IDD within this year yet.

SACHEN JALYOWGER: Okay. Thank you.

PORNRAT JANEJARASSAKUL: Thank you.

OPERATOR: Thank you. Next question coming from Thitithep Nophaket from Phatra Securities. Please go ahead.

THITITHEP NOPHAKET, ANALYST, PHATRA SECURITIES: Thank you. I have a few questions. Regarding your postpaid net adds, which improved markedly in the first Q, largely these are a switchover from the prepaid. How you managed to get postpaid subscribers from other players?

And if you look at the churn rate of the postpaid it has actually tripled from that of the fourth Q in the first Q. I am wondering if that's because of the freeze in promotion that you did in the first Q. And this churn out customer, are they low-end or high-end subscribers? Thank you.

PORNRAT JANEJARASSAKUL: For the postpaid, actually we have acquired new subscribers. This is the majority of the net adds that came in.

THITITHEP NOPHAKET: You mean new, new, like they have never used a phone before, or before they were with other operators?

UNIDENTIFIED COMPANY REPRESENTATIVE: It would be difficult to say on that. It will -- we will have to do a survey on that. But we believe that most of the postpaid are both new subscribers because we are selling postpaid at a very low-end pricing, the THB299. So there are some portion of new subscribers as well.

Churn rate has been increasing and this is under our expectation as we maintain very aggressive on the postpaid acquisition. What came after churn rate is also you saw that bad debt also increased. And we also expect that bad debt will have a slight increase, a continued increase into the second quarter.

THITITHEP NOPHAKET: Okay. And one last question is on the RPM. Your RPM still continues to decline Q-on-Q in the first Q. But when you look at [half] RPM it already starts stabilizing. Why do you think that is and what is the trend going forward? Thank you.

UNIDENTIFIED COMPANY REPRESENTATIVE: Okay. We have an aggressive pricing in the first quarter. We started to raise price at the beginning of -- at around mid of March. The key usage -- the key driver for the usage in first quarter was from some of the promotion that offers unlimited during off-peak hours, especially night time. The night package, if you notice, that creates a lot of high usage. So we'll say that in second quarter we should see a better -- an improvement into RPM.

PORNRAT JANEJARASSAKUL: If we look into details of the increase in the minutes in the first quarter, basically we were quite aggressive in off-peak packages. But most of the minutes that increased, it was actually in -- after 10 at night time mostly. And we have seen quite a bit of improvement on the revenue per minute after we stopped this kind of off-peak aggressive buffet by the end of March already. Whereas, in fact, it doesn't really cost us that much in terms of capacity.

THITITHEP NOPHAKET: Okay. Thank you.

OPERATOR: Thank you. Next question coming from Arthur Pineda from ABN Amro. Please go ahead.

ARTHUR PINEDA, ANALYST, ABN AMRO: Hi. Thanks for the call. I have three questions. First, given that you're not booking interconnection revenues and expenses, does this mean that you will not be paying or receiving money from TAC or True Move where you've already signed commercial agreements?

Secondly, what steps would you need to undertake in order for interconnection to actually be pushed through for you?

And the last question I had was with regard to your guidance for on-net versus off-net minutes, how this has changed in first quarter versus the previous quarters? Thank you.

UNIDENTIFIED COMPANY REPRESENTATIVE: On the IC, the interconnection, we have not accepted invoice or check from anybody so we act as if cannot do this kind of business, this interconnection business. Basically, we are under a TOT concession contract. Even we want to get money, we need to ask them for permission. Interconnection regarded as a new business to us and TOT has not responded whether we can do this interconnection business in that sense. So we …