AIT eyes revenue growth on govt projects

Corporate March 01, 2017 01:00

By PICHAYA CHANGSORN
THE NATION

Advanced Information Technology “conservatively” expects its revenue to grow by about 15 per cent to Bt5 billion this year, thanks to higher project backlogs and more government tenders coming up.



  “Our conservative target is to grow from about Bt4.4 billion last year to Bt5 billion this year,” said Siripong Oontornpan, chairman of the executive board and president.

AIT, a major contractor for projects in information and communications technology (ICT), suffered a 16.2-per-cent drop in revenue and a 19.4-per-cent decline in net profit last year, mainly due to delays of many government projects. 

“Last year, we were disappointed. There was no big project. A Bt100-million project was a rarity,” he said.

Many projects are due to start this year, including the Bt15-billion national broadband network for which TOT last month named eight firms, including AIT, as the suppliers of optical-fibre cable and other broadband-related equipment. AIT won two projects with a combined value of Bt853 million. But fierce competition resulted in a lower profit margin of the winning bidders, Siripong admitted.

To reduce its reliance on project-based income, AIT has striven to increase its recurring income base from maintenance and other services, which have already grown to 30 per cent of total revenue, from just 5 per cent quite recently. 

The company has also taken part in long-term investment projects, including a data-centre joint venture in Thailand and the Mythic submarine fibre-optic-cable project in Myanmar, but it will earn only dividends, and not consolidating incomes and debts from these projects into its balance sheet.

Siripong said AIT would capitalise on the digital transformation trend. While it could negatively affect its hardware business, it is also offering opportunities, as organisations are moving to cloud-based platforms and exploiting the benefits of digitisation. 

To this end, the company has identified six new “pillars” on which to grow its service revenues. These are “cloud” building and implementation, data virtualisation and analytics, IT security, software, Internet of Things, and service-based system integration.

For the data-virtualisation business, AIT is finalising a joint venture with a foreign company that has expertise in the area. For the software pillar, AIT will soon sign an agreement with Germany’s SAP to become its local agent.

Despite higher government interest in using cloud-based and IT-as-a-service solutions, Siripong said there were still some complications in the tendering process that had delayed contractor selections and had not favoured Thai bidders.

He urged the government to reconsider its rejection of a request from Campana Co to land its Mythic fibre-optic cable in a forest area in Satun province for fear of environmental impact, while CAT Telecom was able to land its cable there a long time ago.

“While [the government] has pledged to promote Thailand as an IT hub, it would be regrettable if the investor had to turn to Singapore or Malaysia” to land its cable line, he said.

AIT and Loxley each hold an equal half of Loxley and AIT Holding Co, which has a 34-per-cent interest in Campana, which has been awarded a 15-year concession from the Myanmar government to build the fibre-optic cable network.