Towards Financial Freedom
Myanmar Telco's Real Singapore Beneficiary
Myanmar government announced the winners for the two coveted licenses to Norway's Telenor and Ooredoo (formerly Qatar Telecom), which beat out SGX-listed Singtel and Yoma. In view of the fact that both victors are NeraTel's established customers, we expect the latter to emerge as the sole Singapore winner in the Myanmar telco battle. Reiterate BUY with an unchanged TP of SGD0.79 as we look forward to a strong year ahead.
- The only Singapore winner in Myanmar's telco battle? While SingTel and Yoma have lost the battle for Myanmar's telco licences, NeraTelmay score an indirect victory. This is because our checks show that bothof the Myanmar license winners - Telenor and Ooredoo - are NeraTel'sexisting customers. NeraTel is currently providing services to them inIndonesia and in Malaysia. According to the terms in the contract,effective from September 2013, both Telenor and Ooredoo have ninemonths to commence operations, and need to cover 75% of Myanmarwith voice services and 50% with data services within the next five years. In order to maximise the 15-year license benefits, Ooredoo has even outlined a more aggressive plan, spending USD15bn to reach 90% ofMyanmar's population within two years.In order to cover such a vast area in a short time frame, we expect these telco operators to soon open up project tenders to equipment and system integrating vendors as well as to use radio transmission technology in the process. Given NeraTel's established track record and expertise in the field, we believe that the group has a high chance of winning the tenders. The group has already been deploying payment terminals in the country and we expect them to formally set up a telco company in bidding for the contracts.
- Another pleasant surprise coming up? As mentioned in our previous report dated 29th April, the recent Nera Malaysia acquisition will result in one-off profits of around SGD7m, of which SGD5m is in cash. We believe that there is a high chance that the gain will be recorded in the upcoming 2Q results, thereby increasing the likelihood for the company to surprise the market with interim dividends. As such, we adjust our FY13 profit estimates upwards.
Source: OSK
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