Stock brokers have positive perception on the amalgamation of TRUE and DTAC as it will result on a better cost management and generate new revenue stream in a more equal competition era.
The privileges to customers will become more intensified, resulting in an increase of customer-based of TRUE and DTAC to 53.6 million subscribers with approximately 50% marketshare, projecting a better operational performance from the investment & expenses reduction.
Analyze 5 conditions on the TRUE-DTAC merger to ease the concerns of consumers as the deal is moving ahead. The concern of the service fees will be lifted as it has set to reduce by 12% along with the investment saving which will lead to consumers’ benefit. Once the service fees have dropped, the competitor will be pressured to reduce their prices to compete in the same playing field. While the merger will create new digital services as a new revenue stream with more opportunities to transform into a tech-company. Moreover, the NBTC’s conditions in sharing network for MVNO operators will lead to maximum network efficiency as 5G has immense space for new operators. Therefore, the 5 conditions indicate positive impact for the industry and consumers.
*** ASPS believes the business performance will improve after the cost-expense reduce
Asia Plus Plc Securities Plc (ASPS) revealed on its analysis article that the 3 : 2 votes of the National Broadcasting and Telecommunication Commission, acknowledging the TRUE-DTAC merger base on the NBTC’s Regulatory Merging Measures 2018 have set specific conditions with regulations such as reducing the service fees by 12% within 90 days, remaining as separate brands from 3 years and 5G Network must cover 85% of the population within 3 years
Analysis department perceived this news as a positive factor for mobile phone stock segment as followed;
- Positive for the mobile phone industry as the merger will reduce the major operators from 3 to 2, resulting in a less aggressive competition.
- Positive for TRUE and DTAC in terms of competitive potential from the increasing customer-based from 33.3 million and 20.3 million subscribers respectively in the end of the second quarter 2022 to 53.6 million subscribers or approximately 50% of marketshare with expected better business performance from investment and cost reductions.
On the measures issused by NBTC, most of the conditions are likely to be acceptable by TRUE and DTAC. However, study should be conducted to reach mutual understanding with NBTC. The main issue is the 12% service fee reduction and not allow to reduce Cell sites. The service fees reduction will be compensate from the Economy of Scales after the amalgamation while number of Cell site is another factor to reduce cost.
However, TRUE and DTAC will further propose tender offer from their existing shareholders (Buying price at 5.09 baht and 47.76 baht respectively) and hold shareholder meetings for both TRUE and DTAC for approvals related to the new company after the amalgamation before forming a new company which is expected to occurred by the end of this year or January 2023.
Suggest to “BUY” DTAC (target price after the benefit from the merger at 58.0 baht) but SWITCH from TRUE to DTAC (target price at 5.70 baht) after TRUE shares increase higher than the tender offer, resulting in a higher cost to transform to a new company, compared to the cost from transforming DTAC to a new company.
*** Finansia sees positive sign in a long term with higher opportunity in profit-making
Finansia Syrus Securities Plc indicates positive long-term factor for the industry in terms of competition that will gradually reduce with more opportunity for profit-making. TRUE-DTAC shares have limited upside when compared Tender Offer prices. We suggest “Speculating Profit” เก็งกำไร” while ADVANC will be another stock that gain indirect benefit, we suggest “BUY”
*** Kasikorn Securities discerns positive sign with value-added from cost reduction and higher revenue
Kasikorn Securities Plc indicates that the two companies will further move ahead on the merging process with tender offers in November and the switch of stocks will be in December. While the stock of the merging company is expected to be listed in the Stock Exchange of Thailand by yearend. However, investors should follow the NBTC’s conditions.
The Voluntary Tender Office (VTO) of DTAC is expected at 47.76 baht and TRUE at 5.09 baht, changing from resistance to support, remaining positive perception on this amalgamation from value-added through cost reduction and revenue generation. We suggest Outperform สำfor DTAC at target price of 58.43 baht and TRUE at target price of 6.28 baht.
Moreover, it is projected that the merger of DTAC-TRUE will benefit ADD shares (target price at 20.41 baht), expecting that ADD will gain more customers from DTAC from the existing AIS and TRUE.
