UPDATE 1-Thai AIS Q3 beats estimates, 3G delay clouds outlook

* Q3 net profit 4.18 bln baht vs 3.9 bln consensus

* Service revenue down 4 pct; net additions 380,000

* Cuts 3-year investment to $1.5 bln from $2.2 bln

* Q4 seen improving due to high season, economic recovery

* Shares up 0.6 pct, underperform overall market (Adds details)

By Khettiya Jittapong

BANGKOK, Nov 6 (Reuters) - Thailand's top mobile phone operator, Advanced Info Service PCL (AIS) ADVA.BK, reported a 7.7 percent fall in quarterly earnings on Friday as a weak economy hit revenue, but that beat analysts' forecasts.

A recovery in the economy should boost earnings in the fourth quarter, the high season for mobile use, but the prospects of the Thai telecoms sector hinge on an auction for third-generation mobile phone licences, which will change the way operators pay regulatory fees.

The 3G licensing will create a new payment structure, which will lead to lower costs for operators. The auction had been due in December but regulators say it might be delayed to March as more time was needed to consult on legal issues. [ID:nBKK447277]

“An auction is expected within the first quarter of 2010,” AIS said in a statement.

It said it planned to invest 50 billion baht ($1.5 billion) in total in its 2G and future 3G network over the next three years [ID:nBKK405583]. The latest figure was a sharp drop from the previous estimate of 75 billion baht ($2.2 billion).

Repeated delays to 3G licensing over the years have prompted some analysts to downgrade the sector, but AIS is seen as the safest stock, given its more favourable regulatory cost structure and strong financial status.

AIS shares were up 0.6 percent at 84.75 baht at 0733 GMT GMT, while the overall market was up 1.7 percent.

AIS, 21.4 percent owned by Singapore Telecommunications Ltd STEL.SI, had a July-September net profit of 4.18 billion baht ($125 million), or 1.41 baht per share, down from 4.53 billion baht a year earlier and 4.19 billion in the previous quarter.

The result beat the average forecast of 3.9 billion baht in a Reuters survey of 12 analysts.

For a graphic on AIS earnings click on:


The July-September quarter is expected to be the low point of the year for AIS, with service revenue excluding network fees falling 4 percent, hit by the economic slowdown, it said.

AIS added a net 380,000 new subscribers in the third quarter, down from 809,000 a year earlier but up from 320,000 in the previous quarter. That compares with 70,000 net additions for second-ranked Total Access Communication DTAC.BK (TAC).

At the end of September, AIS had 28.3 million subscribers, while TAC had 19.3 million.

AIS, Thailand's fifth-biggest listed company with a market value of $7.5 billion, has about 50 percent of Thailand's mobile market, ahead of TAC TACC.SI with roughly 30 percent.

AIS stock rose 4 percent in the July-September quarter, underperforming a 20 percent gain in the main Thai index .SETI. ($1=33.38 Baht) (Editing by Alan Raybould)