Structural changes hit Thaicom profit
February 13, 2023
Satellite operator Thaicom has announced its financial results the year 2022.
During the year, the company saw the core profit (profit attributable to owner of the company before unrealised gain (loss) on exchange rate of the company and joint ventures and before extra items) at Baht 527 million (€14.5m), increased by 995.3 per cent compared to that of 2021 of Baht 48 million. Despite the decrease of revenue from satellite and related services following the decrease of Thai broadcast customers, especially government entities, the cost of services also decreased because of the structural change in operating cost after the concession ended, which resulted in significant increase of the core profit.
Thaicom’s revenue from sales and service for 2022 was Baht 2,927 million, decreased by 11.4 per cent from Baht 3,303 million for 2021 due to the decrease of revenue from Thai broadcast customers, together with the decrease of international broadband clients. However, the cost of sales and services for 2022 was Baht 1,500 million, decreased by 36.1 per cent compared to Baht 2,349 million for 2021 due to the decrease of satellite depreciation and concession fee after concession ended.
The company recognised the net profit for 2022 of Baht 42 million, equivalent to Baht 0.04 per share, decreased by 70.7 per cent compared to that of 2021 of Baht 144 million, due to (1) The impairment of the satellite of Baht 259 million in Q3/2022; (2) The net foreign exchange gain for 2022 of Baht 120 million, decreased by 67.6 per cent from Baht 369 million for 2021; and, (3) Share of profit (loss) of investment in subsidiaries and joint ventures for 2022 of Baht (306) million, mainly from the depreciation of the Lao Kip against the US Dollar, resulting in a loss from marked-to-market of its US Dollar liabilities. The depreciation of the Lao Kip against the US Dollar significantly fluctuated during 2022. However, it has become more stable during December 2022 and continuing to January 2023.
The Board of Directors has approved Space Tech Innovation Company Limited (STI), which is Thaicom’s wholly owned subsidiary, to invest in the satellites for the orbital slot of 119.5 degrees East, for the total investment framework of approximately Baht 15,203 million (excluding VAT) (the “Satellite Project”). The project comprises (a) Licence fees for orbital slots at 119.5 degrees East, 120 degrees East, and 78.5 degrees East of Baht 797 million; and (b) The construction of 3 satellites at 119.5 degrees East, including other related expenses of approximately Baht 14,405 million.
The construction of the satellites for the orbital slot of 119.5 degrees East must be completed before the end of life of the Thaicom 4 satellite. This is to ensure that the Company can continuously provide its services to the customer. As a result, the Board of Directors has approved STI to invest in the construction of the satellites for the orbital slot of 119.5 degrees East before others. As to the 78.5 degrees East orbital slot, within 3 years after acquiring the orbital slot, STI would need to launch a satellite into 78.5 degrees East orbit in order to maintain the complete operating rights, allowing the Company to have some additional time to carefully consider an investment in the satellite project at the orbital slot of 78.5 degrees East.
The investment in the Satellite Project is a strategically important business decision. This ensures that Thaicom can keep serving its domestic and international clientele and continue to earn their trust. The Company can also maintain the current customer base on the orbital slot 119.5 degrees East. In addition, it would strengthen investors’ confidence and create additional value and benefits to the Company’s shareholders over the long term.
For the investment in the Satellite Project, Thaicom and STI expect to use the source of funds by securing loan agreements from financial institutions, approximately 65 – 85 per cent of the total investment value. The remaining costs are anticipated to be covered by the proceeds from a capital increase by Thaicom to STI and operating cash flow from the operation of STI. As at the year-end of 2022, Thaicom has cash, cash equivalents, and temporary investment of Baht 5,848 million in total, and also has unused loan amount of approximately Baht 4,000 million, which are sufficient for investment in the Satellite Project.
Lao Telecommunications (LTC), Thaicom’s telecommunication and mobile service provider subsidiary in Lao PDR, reported total mobile subscribers as at the end of 2022 of 2.33 million, increased from 2.01 million as at the end of 2021, and maintained its position as the country’s leading mobile network operator. LTC performance recovered from last year due to significant growth in the teenage segment from the T-Plus brand, and LTC continuously generated positive operating profits.