SingTel – BNP

SingTel wins Champions League rights

SingTel has won the rights to the UEFA Champions League and UEFA Cup for three seasons from 2009-12. While negative for StarHub, we do not expect major churn of sports channel subscribers. Separately, StarHub and M1 have teamed up with City Telecom to bid for NetCo stage of National Broadband Network. OVERWEIGHT. Top pick is StarHub.

SingTel wins media rights to UEFA Champions League
SingTel announced that it has been awarded the media rights to the UEFA Champions League and UEFA Cup for three seasons from 2009-20. While this looks very positive on the surface, we believe it is difficult to access the actual impact of this win as there are no details on how
much the group is paying for the rights. We are concerned that the group may have overpaid for this content and could fail to attract a significant subscriber base to justify the cost. As for StarHub, while the loss is negative, we do not expect major churn among its sports channel subscribers. The group still has the rights to the most valuable sports content, which is the Barclays Premier League, and remains the premier sports content provider in Singapore.

City Telecom, M1 and StarHub in joint bid for NetCo
Hong Kong’s City Telecom, M1 and StarHub have signed an MOU to form a consortium to bid for the NetCo stage of the National Broadband Network (NBN). We reiterate our view that it is not imperative to win the bid as the NBN will likely be highly regulated by the Singapore government. While the playing field will likely be leveled by 2015 as a result of this open-access network, we do not expect foreign competition given the small market and expected high broadband saturation by then. We believe what would differentiate one operator from the other would still be Cable TV content which StarHub has the edge.

M1 launches three new tariff plans
M1 has launched three new tariff plans known as SunSaver, SunSaver Plus and SunMax. There are no changes in tariff rates but only minor enhancements such as free unlimited local calls to three M1 numbers, and per-second billing, etc. M1’s new tariffs are priced very similarly to
SingTel and StarHub. We believe this reinforces our view that mobile competition in Singapore is likely to stay rational, even with the implementation of mobile number portability, as none of the operators have resorted to reducing their tariffs.

Stay OVERWEIGHT on telco sector; StarHub is top pick
We remain OVERWEIGHT on the telco sector. StarHub stays as our top pick, while we also have a BUY call on SingTel. M1 remains a HOLD.

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