SingTel – CIMB

Market share gainer at M1’s expense

Gaining market share at M1’s expense

We have updated our subscriber market share assumptions to reflect our view that SingTel remains focused as aggressor in Singapore’s mobile market and is poised to gain further market share in terms of subscriber but this will come primarily at M1’s expense. However, we believe the pace of SingTel’s subscriber market share gains should slow in 2008 as we expect StarHub to defend its subscriber market share more aggressively.

We believe that SingTel’s bundled offerings is an offensive strategy (customer acquisition) against M1 which lacks bundling capability but is a defensive strategy (customer retention) against StarHub. This is likely to result in SingTel gaining postpaid mobile subscriber share from M1. We expect StarHub to defend its market share more aggressively from 4Q07 going into 2008 with active promotions around bundling but will remain selective in targeting higher-ARPU postpaid subscribers.

Valuation and recommendation

Maintain Outperform with slightly higher target price of S$4.55. Our earnings estimates are tweaked higher by less by 1% as a result of our revised markets share assumptions for Singapore mobile operations. This nudges our sum-of-parts valuation up to S$4.55 from S$4.54. We continue to like SingTel for its rejuvenated Singapore operations and reliable earnings growth from Bharti and Telkomsel.

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