The new company formed by the merger of True Corporation and Total Access Communication (DTAC) debuted on the Stock Exchange of Thailand (SET) yesterday.
The new firm True Corporation is listed in the information and communications technology sector and opened trading at 8.35 baht. Shares of the new company, which was incorporated on March 1, hovered between 8.05 and 8.60 baht in morning trade, finishing at 8.50 baht at midday.
The share price closed at 8.60 baht yesterday in trade worth 6.64 billion baht.
True is a telecom-tech company with existing businesses that are a convergence of cellular, fixed broadband and digital services.
The merged company has 55 million mobile phone subscribers, 20,000 employees, and a combined market capitalisation of 294 billion baht. In addition, the company has 5 million TrueOnline broadband subscribers and 3.2 million TrueVisions subscribers.
On Thursday, the company's management held a press conference to promote their vision and strategy for the new entity.
Management confirmed DTAC parent Telenor would continue to commit itself to Asian markets with the aim of creating local champions in each market.
True aims to expand its 5G coverage from 80% of the population in 2022 to 98% in 2026, giving it the best cellular infrastructure position in the market.
According to Kasikorn Securities analyst Pisut Ngamvijitvong, competition in the cellular and fixed broadband markets will intensify this year as True's customers may experience some service problems during the early stage of the business integration process.
Rival Advanced Info Service (AIS) may take this opportunity to try to lure some high-value customers away from True, he said.
Mr Pisut believes by 2024 the business integration obstacles will have eased and intense competition should subside, allowing synergy value creation to gain momentum. In 2025, a large part of the business integration process should be completed, full synergy value recognised and a hefty roaming fee to the state telecom enterprise National Telecom will end in August.
True is forecast to generate core profits of 5.3 billion baht in 2023, 10.7 billion in 2024 and 18.1 billion in 2025.
The company is expected to realise 20-30% of the potential synergistic value in 2023 and 50-60% in 2024, with a roaming fee savings in 2025.
Capital Nomura Securities (CNS) recommends a "speculative buy" for shares of TRUE, with a target price of 9.00 baht.
The share price is expected to rise in the short term, reflecting disclosure of the company's synergy target, which is expected to be more detailed, the brokerage said yesterday.
The research department at CNS believes positive gains from the merger in the first 1-2 years would mainly come from the use of assets by the new company, whose market share could total 53.2%. In the third quarter of 2022, DTAC had a market share of 22% and True 31.2%.
Competitor AIS, listed as ADVANC on the SET, has a market share of 46.8% at present.
"The research still expects synergies to reach 5 billion baht each year," said the CNS report.
"Every change of 2.5 billion baht in return is expected to affect the new company's target price by 0.5 baht apiece in the same direction following the merger."
Yuanta Securities expects normalised profit of the new firm to amount to 3.5 billion baht this year, rising to 12 billion and 14 billion in 2024 and 2025, respectively, under estimated synergy gains of 2 billion baht, 8.7 billion and 12 billion, respectively.
The brokerage recommends a target price of 10.40 baht by the end of this year.
