Digital Life Service Provider
Share in 2019
Share in 2019
Share in 2019
Operational Highlight
Mobile Operator Leader with a trusted brand and quality network
(gb/data sub/month)
NATIONWIDE
5G speed test
by Ookla
Operational Highlight
Focus on Quality Acquisition with Convergence Service
Consistently
Digital Service
Create New Revenue Streams Supplementing Core Business
Reached over 2 million active users With free and paid contents including TV, movie, music and games.
Enterprise Cloud
Internet of Things (IoT)
Rabbit Line Pay and mPay provide convenient payment services for individual and corporate customers.
AIS has been selected as a member of DJSI family for 2019 BOTH WORLD INDEX AND EMERGING MARKET INDEX
Listed in Thailand Sustainability Investment Index
Financial Highlight
Service revenue continued to grow 8% YoY
from both mobile and fixed broadband
4G consumption and FTTH subscriptions
have been key revenue drivers
EBITDA (Bt mn)
and margin (%)
EBITDA improved 6.3% YoY following revenue growth and efficient cost control.
Net profit (Bt mn)
and margin (%)
Net profit was maintained despite continued network investments and competition
Operating cash flow
(Bt mn)
Strong operating cash flow to support investments for the long term.
Dividend payment (Bt/share)
and payout ratio
Continued to deliver high dividend payout and maintained optimal cost structure
Net debt
to EBITDA (times)
Managed gearing level within an appropriate range for future growth.
Return on Equity
Continued to create return to shareholders
Industry Competition in 2019 and Outlook for 2020
and Competition in 2019
Subscriber market shares in mobile and fixed broadband businesses
Mobile phone business growth due to continued increase in 4G usage
Spectrum allocation as a starting point in preparation for 5G technology
Fixed broadband market upgrades speed to 200-300Mbps
in 2020
Investment in 5G technology to create new business models and revenue sources
Mobile telecom market continues to grow with rising 4G usage
Fixed broadband market expands, supported by wireless home internet services
BUSINESS DIRECTIOn
BUSINESS DIRECTION
The 7 strategic focuses
Dear Shareholders,
2019 was a good year for AIS in spite of the country’s lackluster economic performance with a GDP of 2.4 percent, coupled with heavy competition in both mobile and fixed broadband businesses. AIS maintained its leadership position in mobile business with a revenue market share of more than 48 percent, highest in the industry. In the meantime, AIS Fixed broadband business or AIS Fibre, started 5 years ago, saw higher growth in revenue and subscribers among operators, exceeding the target of 1 million in 2019. Not only did AIS Fibre’s market share rose to 10 percent in 2019, its net profit also turned positive for the first time. For enterprise business, acquiring CSL had strengthen AIS with comprehensive products and service portfolio. With our aim to lead one-stop ICT solutions, we have reorganized to better service enterprise customers and hence were able to stimulate solid growth in enterprise segment.
AIS, as a major telecommunications service provider, maintains a strategy of building upon its mobile customer base of over 42 million people to increase revenue. Towards this, we have continually invested in platforms to enhance our digital service. In 2019, our video platform, AIS PLAY, has continued to grow with 2 million active viewers based on both mobile and home broadband platforms. Additionally, we also expanded digital platform to serve online insurance service in cooperation with insurance companies as business partner. We also expanded into the eSports realm to support the gaming market. All of the aforementioned progresses are crucial for AIS in moving towards being a digital life service provider.
Over the past 29 years, AIS has maintained its number one status by given precedence to customers, partners, and employees. We place customers at the heart of all our operations, delivering them only the best possible technology and responding to their needs. We believe that our future growth is based in cooperation with partners, especially in the coming 5G era, and we will need to collaborate with variety of industries to achieve progress. AIS also devotes great importance to its employees, supporting them to acquire new abilities in step with customer demands and to adapt to rapidly changing technologies.
Our goals for the coming 3-5 years, even as the number one company in mobile service industry, is to transition from being solely a telecom provider to a digital life service provider. This is because customers have access to all kinds of services online and we believe that they seek for services beyond just connectivity.
The first ring of the AIS business strategy is strengthening our core business, that is mobiles business. The second ring is to create a new revenue engine through fixed broadband business and enterprise business. The third ring are digital platforms, which will serve as a foundation to expand into other industries in the future.
Moving into the 5G era, AIS will be able to offer brand-new and distinct customer experiences, opening up to new business opportunities from emerging businesses and services. Over the past 1-2 years, AIS has tested 5G spectrum in preparation of bringing 5G technology to the Thai people. We placed our focus on developing digital and technological infrastructure as well as skilled resources to enhance business capabilities of various sectors and industries in Thailand.
AIS was selected for listing among the Dow Jones Sustainability Indices (DJSI) in 2019, both on the World Market and Emerging Market indices, reflecting our vision and policies for sustainable business. By operating with mindfulness towards the economy, society and the environment, AIS has been able to perform with excellence as well as transparency. We have prioritized our customer data privacy, promoted E-waste management projects in the interest of the environment and supported the Digital Intelligence Quotient (DQ) of the Thai people while using our technologies to build a safe digital Thailand.
We thank all of our customers for their trust in our products and services, our partners for their resolute collaboration in response to our users’ needs and our shareholders for their commitment. We, the executives and staff of AIS, promise to work to our utmost capability towards the goals we have set and, most importantly, to care and reward all of our shareholders and stakeholders to the best of our ability, including being a part in our home nation developments.
Warm regards,
Business Overview
MOBILE NETWORK
FIBRE BROADBAND
DIGITAL SERVICE ENABLERS
AIS has operated as a telecommunications service provider for 29 years, starting in 1990 as a concessionaire endowed with the ability to utilize state frequencies under the 25-year Built-Transfer-Operate (BTO) agreement. In 2010, the National Broadcast and Telecommunications Commission (NBTC) was established and began permitting frequency licenses in 2012, marking a major turning point for the telecommunications industry in Thailand. The licensing scheme conforms to the global telecommunication regulation and supports fair competition as well as the development of new technologies such as 3G and 4G that better served the needs of consumers.
In 2019, AIS’s total assets were valued at Baht 289,669 million with a market capitalization of Baht 633,287 million, ranked 4th on the Stock Exchange of Thailand.
Broadband Market
Subscriber Market Share
in 2019
AIS started its fixed broadband business under the “AIS Fibre” brand, with the goal of creating a new source of revenue by leveraging the already established fibre network and the subscriber base from the Company’s mobile business. Currently, AIS Fibre is available in 57 cities, covering 7 million households. AIS Fibre has penetrated the market using its strength in providing FTTH technology to connect households to the internet and is ready to support existing ADSL users wishing to upgrade to higher quality technology and the superior speed of up to 1 Gbps. Fixed broadband revenue in 2018, therefore, grew by 42% YoY, accounting for 3% of core service revenue. Currently, the total number of subscribers is 1,037,600, accounting for more than 10% of the fixed broadband subscriber market share.
Revenue Market Share
in 2019
Subscriber Market Share
in 2019
At the end of 2019, AIS remained the largest mobile operator in Thailand, with a revenue market share of 48%, and a total of 42 million subscribers nationwide. The mobile phone services revenue still accounting for more than 71% of total revenue. In the past year, revenue in this area continued to grow by 4.2% YoY. With the mobile spectrum currently available to AIS, we are able to provide quality network services, including 4G, 3G and 2G technology, to over 98% of the population. Over the past year, AIS began preparing to enter the 5G era by carrying out research, and development of 5G technologies with its allies and partners, testing its technology network, technical capability, processes and service and utilization across different industries.
Businesses with Digital Services
The third core business of AIS is Digital Services, which involves the development of services using digital technology in a variety of formats, including networks, service platforms and solutions, in order to create digital services for both our corporate and general customers. This is achieved via cooperation with our partners and the development of an integrated business ecosystem in which we grow and succeed together. AIS is currently focused on 5 main areas of business. These are VDO Platform, Business Cloud, Mobile Money, Internet of Things (IoT), and other platform services. Our digital services are an important propeller enabling AIS to access new sources of revenue in the future in addition to current mobile internet charges. It also allows AIS to be an integrated player via the convergence of products and services from our three core businesses.
by the NBTC
The majority of AIS’s businesses, particularly the mobile phone and fixed broadband businesses, operate under the regulation of the National Broadcast and Telecom Commission (NBTC), which is the regulatory authority formed in accordance with the Frequency Allocation Act 2010. AIS, through a subsidiary, was granted a telecommunications business license, as well as 2100, 1800 and 900MHz spectrum licenses. Moreover, AIS is partnering with TOT to utilize TOT’s 2100MHz spectrum. This resulted in AIS having a total of 2x60MHz bandwidth for operations at the end of 2018. AIS is mandated to pay the license fee, Universal Service Obligation (USO) fees, and numbering fees to the NBTC amounting to around 4% of service revenue per year.
“No. 1 service with heart, for a digital lifestyle”.
Our service approach focuses on attentive detail and high level of care combining technology with a distinctive human touch in order to deliver speed, convenience, personal data security, self-service and personalization. We work to excel in best customer experience by differentiating our services and enhances digital technology into service operations. From our survey, the customer satisfaction levels are as follows:
| Customer Satisfaction | 2016 | 2017 | 2018 | 2019 | Target 2019 |
|---|---|---|---|---|---|
| Satisfied customers | 86% | 88% | 88%* | 89%* | 88% |
| * | Methodology changes for customer satisfaction scoring: We have changed the customer satisfaction scoring system from a three-point system to a five-point system since 2018.
|
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Total dividend payment (Baht per share) | 12.99 | 10.08 | 7.08 | 7.08 | 7.34 |
| 1.Interim dividend | 6.50 | 5.79 | 3.51 | 3.78 | 3.78 |
| 2.Second half of the year dividend | 6.49 | 4.29 | 3.57 | 3.30 | 3.56 |
| Dividend payout ratio (percentage) | 99 | 98 | 70 | 71 | 70 |
Industry Competition in 2019
and Outlook for 2020
Subscriber market shares in mobile and fixed broadband businesses
Mobile Business
Fixed Broadband Business
Industry Conditions
and Competition in 2019
increase in 4G usage
The year 2019 saw continued growth in the mobile market overall. Total industry revenue for 2019 was approximately Baht 330 billion, with a growth of 4%. This compares to the previous year’s growth of 2%, and was also higher than the 2019 GDP growth of 2.5%. Currently, there are more than 92 million subscribers in the market, an increase of 2%, with mobile phone penetration rates for Thailand at approximately 140% of the population. While the overall industry prepaid users remained about the same, the number of postpaid users grew by about 9%, due mostly to the popularity of postpaid package with mobile phone discount campaigns and data plan that is more suitable for 4G usage. As a result, the proportion of postpaid numbers per total industry numbers grew from 24% last year to 26% this year, and the total number of 4G customers accounted for about 66% of the total market, up from below 60% in 2018.
This increased 4G usage, coupled with price competition and package price adjustments throughout the previous year, has resulted in the ARPU for the entire industry at the end of 2019 growing. Competition was mainly around data price plan with some improvement from the previous year. However, there remained to be offering of fixed-speed unlimited data plans. Bundling attractive discounts on mobile handset with data plan have remained a key strategy for operators in drawing customers looking to purchase handsets in conjunction with postpaid packages.
in preparation for 5G technology
In June of 2019, the NBTC (National Broadcasting and Telecommunications Commission) awarded 700MHz spectrum licenses to AIS, DTAC and TRUE. Each of the three service providers was allocated 2x10MHz bandwidth, providing a starting point for their preparations for soon-to-come 5G technology over the next 1-2 years. Usage of the allocated spectrums can begin with the first payment installment around the end of 2020, unless otherwise determined by the NBTC. The 700MHz spectrum is a standard low-band frequency for 5G, which has outstanding features in terms of coverage, thus allowing service providers to offer 5G services with excellent coverage. As a result of the aforementioned allocations, the payment period for 900MHz licenses has been extended until 2025.
to 200-300Mbps
Throughout 2019, the fixed broadband market continued to see revenue growth with the customer base for fixed broadband connectivity growing from 9.2 million households in 2018 to more than 10 million households in 2019, representing an 11% growth this past year. This means that the number of households in Thailand with fixed broadband connectivity has grown from 43% in 2018 to approximately 47% in 2019 as the demand for internet connectivity in residential areas continues to increase.
Nonetheless, total industry revenue saw a growth of only 2%, with a total value of approximately Baht 58 billion due to intense price competition. Throughout the past year, all service providers continued to offer steep half-price discounts in order to prevent existing customers from canceling or changing service providers, as well as to attract new customers. Discount campaigns were also utilized in an effort to appeal to customers from other service providers. Although an entry industry price remained in a range of Baht 500-600 per month, service providers continued to upgrade internet speeds from 50 Mbps to 200 Mbps towards the end of the year. Besides, service providers began offering packages with speeds of 1 Gbps for more affordable prices at Baht 800-1,000. As a result, industry ARPU saw a decrease from previous year. Service providers with other available services apart from high-speed internet also continued to offer convergence packages to customers, combining a variety of services into the same package, including high-speed internet, internet SIMs for mobile phones, and content, with the aim of generating long-term quality customers.
Industry Trends in 2020
business models and revenue sources
In December of 2019, the NBTC officially announced the rules and procedures for awarding the license of frequency spectra for mobile telecommunications businesses in the 700 MHz, 1800 MHz, 2600 MHz and 26 GHz spectrum. These procedures contain details of each type of spectrum license, starting price, payment terms and conditions, etc. Each spectrum comes with a 15-year license period and the auction will be held on February 16, 2020. Mobile service providers have been actively preparing for 5G technology, in collaboration with equipment vendors, universities and partners in different industrial sectors, through research and development, testing, and trial of potential commercial use cases. Business alliances are also being sought out for the creation of new business models that will support growth across a variety of industries. For consumer market, 5G technology is designed support high-definition video streaming services, cloud gaming, and the provision of interactive content driven by augmented reality/virtual reality (AR/VR). For the business market, there are potential new services that address various industries, including the manufacturing, service, and agricultural sectors, with services such as automated manufacturing process, remote control machinery, smart home solutions, etc. In the early stage, the expansion of 5G network is expected in the Eastern Economic Corridor (EEC) area as well as in the key smart cities area. The 5G supported devices will also start to be available to Thai market.
with rising 4G usage
Growth in mobile market is expected to continue in tandem with rising demand for data usage due to the continued popularity of social media, games, and video streaming as urban areas and communities continue to expand. While industry mobile user base is expected to have low growth, 4G usage will be the key growth driving factor with a current 4G adoption ratio at about 6x% of industry customer base, up from 59% in 2018. However, the economic outlook could pressure consumer spending and hence industry competition in 2020 is likely to continue with offers of value-for-money price plans to attract customers and marketing campaigns offering mobile phone discounts. The trend of prepaid to postpaid migration is also likely to continue as service providers focus on the expansion of postpaid subscriber bases due to higher ARPU with postpaid than with prepaid base.
supported by wireless home internet services
The continued rise of urbanization rates will boost consumer demand for high-speed internet services. This, along with the fact that the ratio of households with fixed broadband connectivity still has the potential to increase from its current level of 47%, means that all service providers must continue to focus on expansion of coverage for home internet services. While major services continue to be provided via FTTx technology with speeds of up to 1 Gbps, investment must be considered in areas where market demand and investment worth are clear. In certain suburban or rural areas that may be more remote and that have limitations in regard to the costs of fiber cables, 5G technology can help to provide additional coverage, enabling broadband access via the 5G network, also known as WTTx, or Fixed Wireless Access services. This means the use of 5G routers for home internet signal reception instead of the rather limited fiber cables, which will result in service providers being better able to manage network installation costs to suit the specific areas and needs of consumers.
Business direction
over three years
Technology developments have accelerated industrial changes by bringing about new ways of providing products and services. Within a couple years, telecommunication sector will start to see commercial use of technologies such as 3D media, virtual reality, hologram or real-time broadcast, and many more that enriches customers’ experiences. 5G technology is the most recent development that offers such capabilities and enables the aforementioned to be widely used and commercialized. As much as technology advancement alters products and services offered as well as how they are consumed, it also poses risk to business disruption due to emerging new business models and how to service customers. New digital players, such as Over the Top (OTT) operators, arises and are taking deeper customer engagement above and beyond simple connectivity. Telecommunication tends to become more of a wagon to attain service rather than the end service itself.
AIS aims to reinforce its goal of being ‘Digital Life Service Provider’ by enhancing its core businesses; mobile services, broadband services, and digital solutions, and strive for innovative offerings that enrich Thai’s lives and support business operations and build Thailand competitiveness. AIS sees technology as a competitive edge to strengthen capabilities and drive sustainable growth in Thailand.
with quality service and operational excellence
Thailand has constantly been having a growing mobile internet usage resulting from the rise of affordable smartphones and digitalized platforms that are playing an increasingly important role in Thai people’s life. Telecommunication network advancement will be compulsory as technologies become more interwoven into people everyday lives. As a leading mobile service provider in Thailand, AIS is driven to continue investing to advance mobile network and service capability including its current 4G service and the future 5G service through research and development with partners. It is expected that 4G service will continue running in parallel with 5G over the next two to three years. AIS will take lead in bringing richer media and entertainment and serving at a more personalized level through enhanced data analytics. AIS aims to maintain its industry’s leadership with service and operational excellence as well as network quality
Progressing into 5G technology, AIS will strive to cultivate technology knowledge and use cases through studies and partnering with industry’s experts in order to enhance 5G ecosystem in Thailand. As 5G prime features include speed, ultra-low latency, massive connectivity, it will bring about many new services for both consumers and corporate uses such as 3D video, work and play in the cloud, augmented reality, industry automation, mission critical application, smart city/home/car. For enterprises, AIS aim to facilitate the use of 5G technology in industries-specific process automation and customer data management. AIS intend to use its network expertise and knowledge to address industry-specific needs as well as innovating revenue-generating models.
both fixed and mobile infrastructure
Quality home broadband has become more essential in Thai households as digital services developments has increased its importance. There has been a growing demand for ultra-high resolution streaming of video, contents and games. The needs are pushing for a faster, more reliable, and higher-capacity network. AIS aims to continue expanding its broadband network availability into urbanizing areas leveraging on its currently available mobile network fibre infrastructure. With the capability of 5G technology, home broadband can benefit from deploying 5G as Fixed Wireless Access (FWA), which enable connectivity in areas where fiber is prohibitively expensive or where there are geographic limitations in building and maintaining the infrastructure. FWA can reduce the setup cost and time as it does not require physical fiber optics layout as last mile, but rather connected via mbile equipment.
With growing access to home, AIS aims to provide more services to family in the future being home entertainment, home security and automation, etc. Consumers tend to be more connected relentlessly and seamlessly on multiple devices. AIS believes in providing consistent service availability and quality both indoor and outdoor for customers and their families. Today, AIS continue to reach out to the existing mobile subscriber base to offer home broadband offering bundled package of mobile, home internet, AIS PLAY, which offers video contents and OTT programs.
lifestyle and strengthen enterprise’s competencies
While connectivity has become a necessity, platforms has become the focus of user utility. The importance will no longer be on the means to connect, but rather the destination or the services that customers need to reach. AIS aim to expand its offerings and be customer’s Digital Life Service with added new services that are personalized, real-time and predictive including services like video, mobile money, IoT, Cloud, and other services such as game and insurance. By building strong partnership, increasing convenience and platform usability, AIS targets to grow its digital service user base. Revenue model will range from subscription base, fee base to advertising model.
AIS also aims to play a major role in addressing the growing needs of enterprise’s digital transformation. AIS will reinforce its offerings advancements, including improving its cloud service capability, encouraging partnership with leading ICT providers, and expanding its data centers capacity to capture the potential demand for cloud service. The services will allow enterprises to optimize cost efficiency, ensure system reliability and security, and strengthen their capability, which will complement to Thailand’s competitive advantage in economic development.
processes and uplift people development
Driving toward digital age, AIS aims to utilize technology to reinforce its competitiveness in offerings with 1) data analytics, 2) efficient RPA processes, and 3) skilled human resources. Firstly, Customer Value Management (CVM) and customer relationship will be improved with data management and customers will be reached with suitable offerings in a more personalized channel. AIS will not only be able to offer the right product mix with added services and platforms that AIS already has, but also be able to personalized the bundles meeting the increasingly diversified needs. Secondly, AIS will integrate technologies such as RPA, Artificial Intelligence (AI), and Machine Learning (ML) to enhance its customer services and internal processes. Automation can help fill the gap given its efficiency, on-demand availability, and reduce human errors. Moreover, technology integration will allow AIS to achieve cost optimization. Lastly, People has been one of the key focuses in achieving long-term and sustainable success especially amid the radical changing competitive landscape. AIS encourages its employees to be active with growth mindset and open to rapid changes. AIS Innovation Center and digital learning platform, which gives on-demand and variety digital courses, have been introduced to shape personnel knowledge and skills. Reinforcing such programs, AIS’ people will be ready to employ technology and innovation in their work process and; therefore, collectively move toward its goal of being ‘Digital Life Service Provider’
Business Sustainability
The 7 Strategic
Focuses
2019 was a remarkable year for sustainable development at AIS as we revamped our strategy for long-term development and growth. After five years, we replaced the 5 former focus areas which placed emphasis on communities and society, customers, partners, employees and environment in relation to the telecommunication business. In their place, 7 new strategic focuses have been established with the aim of supporting AIS’s new business direction as a digital life service provider.
The 7 strategic focuses place importance on building the business’s strength and on responding to the challenges and opportunities that may have significant impacts on AIS and the use of digital technology to create a positive impact.
Environment
Reduce & recycle waste from operation as well as encourage customers to dispose e-waste properly
- Reduce non-recyclable e-waste from 5% of total waste in 2018 to 3%
- Collect 9mn pieces of obsolete mobile and related electronic waste for proper recycling
Reduce GHG emission and utilize renewable energy in most possible extent in our operation
- Reduce GHG emission intensity scope 1 and scope 2 combined by 75%, compared to base year of 2015
- Increase renewable energy usage from 0.06% of total energy consumption in 2017 to 5%
Economy
Innovate digital products & services to improve quality lives and promote businesses in Thailand
- 1,000+ active partners, with a product and/or service launched in the market on AIS Partner Platform
& Cyber Security
Ensure effective data governance to enhance customer value while ensuring customer trust
- Comply with cyber security-related laws and regualtions, new technology-adopted standards, and privacy regulations toward the 2021 target
- Enhanced cyber security protection and visibilty to protect infrastructure, system and new related services toward teh 2021 target
Community
Development
Drive AIS’ human capital to pursue new strategic growth area
- Acquire new abilities in digital technologies that support AIS business growth
- 80% of talent pool is retained
- 80% of existing employees are trained and equipped with new abilities digital technologies
- 80% employee wellbeing index
Inclusion
Leverage our digital infrastructure & solutions to uplift community well- being & reduce digital divide
- 100,0000 people improve wellbeing through our digital platform and collaboration
& Online Safety
Establish trusted brand in cyber wellness & online safety to build healthy online space
- Become the most truste operators in cyber-wellness
- Reach 500,000 people through our cyber-wellness & online safety programs
AIS has embedded its sustainability strategy into day-to-day business operations; defining the Company’s business direction, product and service development, innovation, and human resource management.
In doing this, we set a clear performance measurement as well as short-term and long-term targets. For further information, please refer to the Annual Report at http://sustainability.ais.co.th/en/report/sustainability-report.