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February 12, 2009

Thailand Telecoms: TAC plans to boost cash flow in slowing market

Thai mobile phone company Total Access Communication Plc aims to generate more cash flow this year when the overall mobile phone market would grow at a slower pace.

TAC, controlled by Norway's Telenor (TEL.OL), is targeting cash flow of about 12 billion baht ($343 million) this year, up from about 9 billion baht last year, thanks to rising revenue and lower costs, Reuters quoted Chief Executive Officer Tore Johnsen as telling reporters.

Due to a slowing economy, the industry's net new subscribers would fall by half to about 4 million this year, of which up to 1.4-1.6 million were expected to take TAC's services, he said.

"We aim to maintain our market share and expect to get about 35-40 percent of the market's net additions," Johnsen said.

TAC operates Thailand's second-largest mobile phone network and has about 30 percent of market share. Bigger rival Advanced Info Service ADVA.BK has about 50 percent.

TAC added 2.9 million net new customers last year, boosting its subscriber base to 18.7 million at the end of December.

Uncertainty about the global economic outlook made it difficult for TAC to give a projection for revenue growth this year and the firm would focus on cost control and maintaining operating cash flow for future investments including 3G, he said.

The exact figures for investment this year would depend on market conditions and regulatory requirements for getting licences for third-generation mobile services to be set by the industry regulator, Johnsen said.

Thailand's telecoms regulator has said it expects to issue new 3G licences through an auction by the third quarter of 2009, but it has not announced details about the auction.

If the regulator gives out 3G licences by the third quarter as planned, TAC's investment in its 3G network would be about 2-3 billion baht in the fourth quarter and another 5-10 billion would probably be spent next year, he said.

Last week, TAC reported a worse-than-expected 22 percent fall in fourth-quarter net profit due to lower mobile usage in a weak economy. Analysts expect even weaker earnings in 2009 as the economy slows further and unemployment rises.

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