More customers opt for higher value plans. SingTel attributed the 3% q-o-q (+2% y-o-y) increase in the customer acquisition cost for Singapore to a bigger proportion of customers taking up its higher value postpaid and data plans. Management refuted claims that its subsidy is more aggressive than its rivals'. We expect customer acquisition cost to slide as the demand for Android handsets rises although this may change when the iPhone 5 is launched later this year.   

Eyeing more good content. We expect SingTel to bid aggressively to retain its exclusivity for the BPL when the auction for the new season starts in October. As subscribers attach significant value to the iconic content, SingTel risks losing the sound traction it has built up over the last two years for its pay-TV business should it be unable to maintain the rights. We expect the group to push for greater take-up of its fiber plans to ensure that problems on its IPTV feeds do not recur. To widen mio-TV's appeal across races, SingTel recently signed on Sun TV, the world's leading Tamil channel, and will be adding a Chinese channel soon. Management said it will target fresh content that are coming off contracts by end-2012.

Living the Digital Life. SingTel's new Digital Life business contributed SGD82m in revenue in 1QFY13. This amount incorporated the contribution from Amobee, a digital advertising specialist acquired in March. It expects the digital life business to become a larger part of the group's overall business but did not provide any guidance.   

LTE to be more relevant in 2013. The group indicated that the contribution from new LTE/data plans is insignificant due to the limited LTE handsets on offer (HTC, LG and Samsung). It expects to be able to monetize its 4G network better when coverage expands to over 90% of the population by end-2013 from 80% currently.

Associates. We remain concerned over Bharti's strategy to defend its market share at the expense of profits. This contributed to the 3.1%-pts decline in its EBITDA margin q-o-q. SingTel does not rule out participating in any equity fund raising exercise carried out by Bharti. 

Source: OSK