Digital Transformation And 5G Expansion Will Reinvigorate Thai Telecom Industry

Key Takeaways

• Accelerated network modernization, automation, and advanced AI are boosting margins, sustainability, and positioning True as a higher-margin, digital-first operator.
  
• Strong digital economy demand and strategic expansion into B2B tech with global partnerships are driving outsized revenue and rapid market share gains.
  
• Slowing subscriber growth, digital disruption, heavy debt, intense competition, and rising regulatory pressures threaten True Corporation's long-term revenue, margins, and earnings sustainability.

Catalysts

Provides telecommunications and value-added services in Thailand.

• Analysts broadly agree that network consolidation and tower modernization will improve margins, but True's accelerated realization of synergies-outperforming its initial timelines and expanding the modernization target by 1,000 towers-suggests these initiatives will drive EBITDA margins and normalized earnings even higher and sooner than consensus implies, transforming True into a structurally higher-margin operator.
  
• Analyst consensus expects process automation and digitalization to trim costs, but True's plan to double automation in just one year and its advanced AI integration are likely to yield materially greater sustainable OpEx reductions, enabling both faster net margin expansion and a step-change in scalable, digital-first revenue growth.
  
• Burgeoning demand from Thailand's digital economy and persistent subscriber growth, highlighted by significant ARPU uplift and surging data usage, positions True to capture outsized revenue upside well beyond GDP-like growth-especially as True capitalizes on the region's rapid internet adoption and deepening e-commerce penetration.
  
• True's aggressive push into IoT, cloud, and AI-driven enterprise solutions-underpinned by partnerships with major global tech players-unlocks the potential to dominate new B2B verticals, rapidly expand addressable markets, and accelerate both recurring and high-margin service revenue.
  
• The company's financial discipline and consistently outperformed deleveraging targets, combined with robust normalized free cash flow and an impending shift to a high dividend payout, point to a rapid re-rating in True's equity as market concerns about leverage and sustainability dissipate.

True Corporation Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on True Corporation compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming True Corporation's revenue will grow by 4.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -2.3% today to 15.9% in 3 years time.
• The bullish analysts expect earnings to reach THB 37.1 billion (and earnings per share of THB 1.09) by about August 2028, up from THB -4.7 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.8x on those 2028 earnings, up from -80.2x today. This future PE is lower than the current PE for the TH Telecom industry at 20.9x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.57%, as per the Simply Wall St company report.

True Corporation Future Earnings Per Share Growth

Risks

• Population aging and demographic stagnation in Thailand are likely to limit long-term subscriber and revenue growth for True Corporation, as the addressable market for telecom services could shrink over time, negatively affecting top-line revenue growth.
  
• Intensifying digital disruption from OTT services such as WhatsApp and Line threatens to further erode traditional voice and SMS revenues, and despite True's efforts to grow digital and lifestyle services, these new revenues may not fully replace the rapidly declining legacy revenue streams, risking long-term revenue and earnings sustainability.
  
• Persistent high debt levels post-merger and continued requirements for significant network investment, including ongoing 5G and infrastructure capex, could strain net margins and free cash flow, particularly if revenue or ARPU growth slows or interest rates rise.
  
• The Thai telecom sector's saturated and price-competitive environment is likely to make sustainable ARPU increases difficult, and True's reported ARPU growth may be vulnerable if competitors aggressively pursue market share or government price controls are implemented, which could undermine margin improvement and future earnings.
  
• Regulatory risks such as stricter data privacy and cybersecurity requirements, as well as potential regulatory scrutiny over market concentration, may drive up compliance costs or threaten pricing power, further pressuring operating margins and future profitability.

Valuation

• The assumed bullish price target for True Corporation is THB18.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of True Corporation's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of THB18.0, and the most bearish reporting a price target of just THB11.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be THB233.6 billion, earnings will come to THB37.1 billion, and it would be trading on a PE ratio of 20.8x, assuming you use a discount rate of 7.6%.
• Given the current share price of THB10.8, the bullish analyst price target of THB18.0 is 40.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.