Towards Financial Freedom
SingTel - Exits Pakistan
THE BUZZ
Singtel announced that it has entered into an agreement for the sale of its 30% stake in Warid Telecom to Warid Telecom Pakistan LLC (WPTL). WPTL is an existing shareholder of Warid, and is part of the Abu Dhabi Group, which owns a 70% stake in the latter. SingTel will receive an aggregate consideration of USD150m (SGD186m) and a right to receive a 7.5% share of the net proceeds from any future sale, public offering or merger of Warid.
OUR TAKE
Back to its parent. Singtel had earlier classified Warid as an 'asset held for sale' and ceased equity accounting of the telco from 1 July 2012. Warid has been making losses since it was acquired in 2007, with Singtel having invested SGD1.3bn to date. We are positive on the transaction as it allows the group to stem further losses in an associate for which meaningful contributions are not likely in the foreseeable future given the challenging mobile landscape in Pakistan. The Pakistan mobile market also took a hit from the government's move to ban the sale of SIM cards by retail outlets late last year.
Maintain NEUTRAL based on FV of SGD3.07. The disposal would translate into a loss of some SGD230m which includes foreign currency translation losses and transaction costs to be booked in 4QFY13 or some 6% of our core FY13 earnings estimate. We are keeping our NEUTRAL recommendation on SingTel as the stock lacks share price catalysts with concerns over competitive risks in Singapore and Australia. Our preferred picks are Starhub for exposure to Singapore telecoms and Axiata for the regional telecoms space.
Source: OSK
Singtel announced that it has entered into an agreement for the sale of its 30% stake in Warid Telecom to Warid Telecom Pakistan LLC (WPTL). WPTL is an existing shareholder of Warid, and is part of the Abu Dhabi Group, which owns a 70% stake in the latter. SingTel will receive an aggregate consideration of USD150m (SGD186m) and a right to receive a 7.5% share of the net proceeds from any future sale, public offering or merger of Warid.
OUR TAKE
Back to its parent. Singtel had earlier classified Warid as an 'asset held for sale' and ceased equity accounting of the telco from 1 July 2012. Warid has been making losses since it was acquired in 2007, with Singtel having invested SGD1.3bn to date. We are positive on the transaction as it allows the group to stem further losses in an associate for which meaningful contributions are not likely in the foreseeable future given the challenging mobile landscape in Pakistan. The Pakistan mobile market also took a hit from the government's move to ban the sale of SIM cards by retail outlets late last year.
Maintain NEUTRAL based on FV of SGD3.07. The disposal would translate into a loss of some SGD230m which includes foreign currency translation losses and transaction costs to be booked in 4QFY13 or some 6% of our core FY13 earnings estimate. We are keeping our NEUTRAL recommendation on SingTel as the stock lacks share price catalysts with concerns over competitive risks in Singapore and Australia. Our preferred picks are Starhub for exposure to Singapore telecoms and Axiata for the regional telecoms space.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
