Towards Financial Freedom
SingTel - Striking a Chord With Data
We remain NEUTRAL on Singapore telecoms given the good momentum exhibited by the telcos in monetizing data via tiered plans. Sector valuations are arguably not cheap but they reflect the telcos' capital management potential and resilient earnings, notwithstanding concerns over rising bond yields. We favour M1 (NEUTRAL, FV: SGD3.25) as it is executing well on its data aspirations and has the lowest competitive risks.
- 2QFY13 data rings louder. The 2QFY13 results of the Singapore telcos were generally in line with the market and our expectations. The key highlights for the quarter were: i) improved take-up of tiered data plans, and ii) lower industry handset sales/equipment costs which lifted sector EBITDA margin by 3ppt q-o-q. SingTel's results were marred by revenue pressure at Optus and a weak AUD although EBITDA was held up by cost initiatives. StarHub's performance was lifted by the national broadband network (NBN) adoption grant while M1's subscriber acquisition cost (SAC) surprisingly rose despite lower handset sales.
- Tiered data adoption gains momentum. More Singaporeans are making the switch to tiered data plans, which contributed to average revenue per user (ARPU) accretions of 1-6% q-o-q. About 30% of postpaid subscribers migrated to tiered plans in 2QFY13 vs 23% in 1QFY13 and 16% in 4Q2012. We believe the adoption rate could well exceed 40% by end-2013 as more LTE devices flood the market and the usage of bandwidth intensive applications rise. We expect the celcos to raise excess data charge by year-end to better monetize data.
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....
