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Internet boom brightens Thai telecoms outlook

BANGKOK: Thai telecoms firms are expected to improve on their 1999 financial results this year on the back of an economic recovery and the Internet boom, analysts said on Monday.

Thai telecoms firms are set to benefit from euphoria over Internet-related businesses as all have links with companies serving the global computer network.

Despite a strong surge in their share prices since late last year, Shin Corp, and its two units Advanced Info Service Plc (AIS) and Shin Satellite Plc(Sattel), remain the top picks of most analysts.

"We are generally positive on telecoms stocks, especially Sattel, the cheapest one in the sector," said Andy Chan, telecoms analyst at ING Baring Securities.

Analysts said Sattel, the country's only satellite operator, would benefit from strong demand from Internet-related companies outside Thailand such as Bangladesh and Cambodia.

In the cellular phone sector, analysts say AIS's subscribers in 1999 probably rose 23 percent year-on-year to about 1.21 million while those of its rival Total Access Communication Plc(TAC) increased 10 to 15 percent to 1.1 million.

They said Shin's plans to swap shares with Samart Corp to give it a stake in Samart's mobile phone operator Digital Phone Co would stregthen AIS's competitiveness.

The proposed share swap plan is expected to be concluded by the end of this month.

"It is possible TAC would lose market share if Shin and Samart can conclude the merger plan by the end of this month," said another telecom analyst at Asset Plus Securities, who recommended a "sell" on TAC.

Analysts said the uncertainty over TAC's plan to find a stategic partner was another major risk for the company.

TAC said last month it planned to sign a deal with a foreign partner by the middle of this month.

For the fixed-line telephone market, the outlook of TelecomAsia Plc (TA) is brighter than its peer, Thai Telephone and Telecommunication Plc (TTNT), which is still suffering from structural problems resulting from complicated revenue sharing rules, analysts say.

Under these rules, now being renegotiated,TTNT has to pay 43 percent of its gross revenues to the state-run Telephone Organisation of Thailand in return for the right to operate the network it built and paid for.

TelecomAsia shares are some of the most expensive in the sector but are still among the top four picks of most analysts due mainly to the company's Internet prospects and its plan to mobilise funds in New York's Nasdaq market later this year.

But TA is still expected to post a net loss for 1999. Asset Plus has a "sell" on TA and expects it to post a net loss of 4.1 billion baht for 1999.

On TTNT, most analysts have a "neutral" or "sell" recommendation on the view that a change to the revenue sharing system is unlikely to be concluded before November this year.

"We are neutral on TTNT as its performance will depend on the results of concession conversion," said Amarit Sukhavanij at Merrill Lynch Phatra Securities.-Reuters