Loxley - OSK

RHB Research 06 Mar 2013
Smart Thailand project. Loxley is also eyeing some portion of the government’s THB80bn ICT
infrastructure project aimed at improving the broadband network across the country, known as the
Smart Thailand project. Under the project, the government aims to expand the coverage of
broadband network to 80% of the population in three years, and 95% of the population by 2020.
The project is divided into two phases. The first phase, which is set to kick-start this year and be
completed in 2015, will involve upgrading the existing telecom networks to reach 80% of the total
population. The second phase, which will span from 2016 until 2020, will entail the installment of
broadband network in areas where fibre-optic network is not yet available. Under the Smart
Thailand project, the fibre optic network will be used as the main broadband network nationwide,
including in public areas such as schools, hospitals and government places, while the Internet
connection will be provided at affordable costs or free of charge. In addition, the government will
initiate free Wi-Fi projects in collaboration with service providers to offer the service in remote
areas. In view of its strong track record, we think Loxley stands a good chance of being selected to
participate in the rollout of the Smart Thailand project.
Benefiting from massive 3G investment. In preparation for Thailand’s first 3G wave, the
government has allocated THB7.6bn for the ICT sector in FY13, up 102% y-o-y. While the amount
may be small, it signals the government’s increasing attention on the sector, which has high
potential for growth. We believe the budget for the sector will continue to grow in the future, as
state telcos and private players are ramping up upgrades on their existing networks. As such, we
think Loxley, being one of the leading players in the field coupled with its strong track record and
experience, stands to benefit from the new systems integration and upgrading works of existing
systems.
Figure 11: Timeline of TOT’s 3G installation
Source: SAMART
Digital TV. According to Thailand’s latest National Radio and Television Broadcasting Act, there is a
possibility that broadcasting will move to digital technology. This will help stimulate broadcasters to
expand their businesses by going digital. In this sense, the potential for growth is vast. The shift in
broadcasting devices to digital TV systems for five networks in Thailand is estimated to be worth
around THB15bn. Moreover, the government controls the majority of TV stations and Loxley has a
high chance of winning a good deal of the bids. Customers include the Public Relations Department,
Royal Thai Army Radio and Television, MCOT Pcl, Parliament Radio and Television Station and the
Military’s broadcasting channel as well as the Military Development Office.
New opportunities in neighbouring countries. Supported by its vast experience in the
domestic ICT sector, Loxley’s management sees opportunities to provide ICT services abroad as
part of its expansion strategy. It is collaborating with AIT in a 50:50 joint venture named Loxley &
AIT Holdings Co Ltd, which will be investing in new projects abroad as well as at home. One of
these is the THB9bn fibre optic cable project in Myanmar, which is expected to be finalized soon.
Other than that, Loxley is also keeping an eye on potential ICT projects in Cambodia, Vietnam and
Laos.
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