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Symphony to play different financial tune

Symphony Communication is considering a financial restructuring to help improve its flexibility after seeing net profits hit by soaring depreciation and interest costs.

Despite achieving year-on-year sales growth of more than 30 per cent during the last four quarters, Symphony - which provides fibre-optic cable networks to serve the data communications of Internet service providers, mobile-phone operators, digital-TV operators, banks and large corporations - booked a disappointing 24.2-per-cent fall in net earnings, which totalled Bt101 million in the second quarter.

The listed company cited higher depreciation and interest costs as factors in the profit decline. Its debt-to-equity ratio rose to 1.29 times, from 0.77 time at the end of last year.

Kranphol Asawasuwan, chairman of the executive committee at Symphony, told the Stock Exchange of Thailand's "Opportunity Day" event on Tuesday that the company, which to date had been mainly reliant on commercial-bank loans, was now considering restructuring its debts by utilising financial tools such as debenture issuance, which have longer repayment terms to match better the 20-to-30-year life span of its assets.

"There is no need for a capital increase over the near term," he said.

Executive vice president Pongthep Thanakijsuntorn said Symphony expected its net profit margin to pick up gradually from next year, since it would not have to invest as heavily in terrestrial fibre-optic networks as it had done during the past three years.

Regarding its new submarine-cable project, Kranphol said the company had formed a consortium with partners to invest in the US$60-million (Bt1.92-billion) project, but he could not disclose much information until the consortium signed the construction and maintenance contracts, scheduled for next month.

He said the company would apply a "special business model" to its new submarine-cable business that would help it lessen the financial burden when compared with its terrestrial cable-network investments.

"We can't tell when we will be able to stop [investing heavily]. This submarine cable is our first step. We may have second and third lines in the future," he said.

Own undersea cable

Symphony has decided to build its own undersea cable that will connect Thailand with Malaysia and Cambodia, to serve its fast-expanding international private leased circuit (IPLC) business, which expanded by more than 600 per cent in the first half of the year.

It was recently granted the IPLC licence by the National Broadcasting and Telecommunications Commis-sion, which in doing so in effect did away with the monopoly that had been enjoyed by state-owned CAT Telecom.

More recently, the NBTC also approved an application from state-owned TOT to build three submarine cable networks.

Kranphol said Symphony was not concerned about upcoming competition from TOT, since the latter could apply a different business approach from that of his company, which he said was focused on being a provider of "neutral premium international telecom network" services.

Meanwhile, it is maintaining its 30-per-cent-plus overall revenue-growth target for this year, although it has cut the growth target for its private network clients to 20 per cent from 38 per cent, and the target for broadcasting clients to 25 per cent from 30 per cent.


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