Mobile operators counting the cost of 'painful' price war
The fierce battle for customers between Thailand's mobile-phone operators is beginning to backfire for some, which are seeing it as a business obstacle greater than the economic slowdown. The competition and the low-call-rate campaigns are beginning to eat into their profitability.
The price war will cease in the second half of the year because cellular operators have learnt a painful lesson of its affects - call jams and a decline in revenue, according to Thana Tienachariya Total Access Communication (DTAC)'s chief commercial officer."What we've got to do during the second half of the year is adjust the call rates to make them more reasonable," Thana said. In an official statement, DTAC, the country's second-largest cellular operator, said its offer of low-call rates in the second quarter succeeded in increasing the duration of subscribers' calls, but the increase did not offset the reduced call rate per minute. As a consequence, its average revenue per user for both prepaid and post-paid subscribers in the quarter fell by 13.7 per cent year on year and 12.9 per cent quarter on quarter to Bt356 per month. DTAC's net profit was Bt1.176 billion, up 13 per cent year on year, but down 6.4 per cent quarter on quarter. Thana said the economic outlook would improve next year when the country was expected to have a new government. Other cellular companies have not yet announced their second-quarter financial results. But, Kim Eng Securities forecasts that True Corp Plc will post a net loss of Bt1.18 billion, after making a net profit of Bt499 million in the previous quarter. This is due to the price war, which has hit True's overall telecom businesses. Merchant Partner Securities predicts that Advanced Info Service's net profit in the second quarter will be Bt4 billion, 24-per-cent less than the prior quarter and 3.7 per cent less year on year, due to the price war. Thana said the expected end of the price war was also due to cellular operators' preparations for the adoption of the interconnection charge, which will require all telecom operators to share voice and data revenues from calls between two networks. However, DTAC will not revise its target to add two million net new subscribers this year because it signed up about 1.8 million in the first six months. Phisal Jorphochaudom, acting president of CAT Telecom Plc, and Supachai Chearavanont, True's chief executive, both said their companies were less affected by rising oil prices than they were by the bruises of industry competition.
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