Bloomberg News

Advanced's 4th-Qtr Profit Rises on Lower Tax Payment

February 27, 2006

Advanced Info Service Pcl (ADVANC), sold by the family of Thai Prime Minister Thaksin Shinawatra last month, unexpectedly posted a 1 percent increase in profit in the fourth quarter on lower income tax payment.

Profit at Thailand's largest cell-phone company, now controlled by Singapore's Temasek Holdings Pte, rose to 4.96 billion baht ($126 million) from 4.92 billion baht a year earlier, according to figures derived by subtracting nine-month from full-year data reported by Advanced in a stock exchange filing. Profit was expected to be 4.82 billion baht, according to the median estimate of eight analysts surveyed by Bloomberg.

Thaksin's family, which ceded control by selling a 49.6 percent stake in parent Shin Corp. to Singapore's Temasek Holdings Pte, pulled out as Advanced Info cut rates to lure subscribers in a country where half the 65 million population own cell phones. The prime minister has faced calls to quit over the sale, which netted the family a tax-free $1.9 billion.

``The industry is getting more mature and we don't expect significant growth in terms of subscribers and earnings'' at Advanced Info, said Monchai Mokaranuraksa, an analyst at Tisco Securities Co Ltd. in Thailand with a ``hold'' rating on the stock. ``The smaller guys still have room to grow.''

Advanced will pay a second-half dividend of 3.30 baht, bringing the full-year payout to 6.30 baht a share, compared with 2004's total payment of 4.75 baht a share, the company said in a separate statement to the Thai exchange today.

Shares Drop

The stock fell 1 percent to 97 baht at 2:46 p.m. in Bangkok. Advanced Info shares have fallen 10.2 percent this year, compared with a 5.3 percent gain in the benchmark SET Index.

Sales from phone service and handset sales at Advanced fell 1 percent to 24.3 billion baht. Income tax payment fell 27 percent to 1.83 billion baht from 2.5 billion baht, according to Bloomberg's calculation. The tax bill dropped after Advanced recognized revenue from pre-paid cards from when customers activate them rather than when they are sold, the company said.

Advanced's 2005 net income fell 7 percent, its first annual profit drop in four years, to 18.9 billion baht, or 6.42 baht a share. The company attributed the yearly decline to price competition to win subscribers, exacerbated by the impact of higher fuel costs on individual spending power.

Advanced, the slowest of the country's three biggest mobile-phone companies to cut call rates last year, on May 9 slashed prices to as low as 0.25 baht a minute, from about 3 baht, after losing market share to cheaper rivals for two months.

Advanced's average monthly revenue from prepaid customers as of Dec. 31 fell 7 percent from a year earlier to 326 baht, according to the company Web site. Prepaid users, who buy cards with stored value, accounted for 88 percent of total customers. Advanced had 16.4 million subscribers as of December, or 56 percent of the market, down from a 58 percent share at end 2004.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

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To contact the editor responsible for the story: Bruce Grant in Hong Kong bruceg@bloomberg.net


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