OREANDA-NEWS. Fitch Ratings says in a new report that the Thai telecommunications industry will remain under pressure in 2016 due to slow revenue growth, intense market competition, and high investment needed for new spectrum acquisition and network expansion.

Fitch forecasts industry revenue to increase by a low-single-digit percentage in 2016, driven by growth in mobile data services. Voice revenue will continue to decline as the market saturates, and data cannibalises voice and text revenue.

Margin improvement in 2016 is likely to be slow because the benefit from regulatory cost savings is likely to be offset by an increase in marketing expenses and network operating cost due to intense competition. The acquisition of new spectrum and the expansion of 4G networks will drive capex investment. As a result, most telcos' free cash flows are likely to be negative, and their financial leverage will increase over the next two years.

Nevertheless, the rating Outlooks of Advanced Info Service Public Company Limited (AIS, BBB+/AA+(tha)/Stable) and Total Access Communication Public Company Limited (DTAC; BBB/AA(tha)/Stable) remain Stable. This is mainly because their current ratings incorporate large buffers against the likelihood of low EBITDA growth and negative FCF. Nevertheless, the deterioration in credit metrics also suggests that greater pressure is building on the ratings.

The report, "2016 Outlook: Thai Telecommunications", is available on www.fitchratings.com.