SingTel – Phillip

Won the rights for Barclays Premier League

Rights for Barclays Premier League (BPL). SingTel announced that it had won the bid for the rights to BPL matches for a period of three years beginning August 2010. SingTel had beaten StarHub for the rights and the amount of the bid was not disclosed.

Impact from the win. We expect the revenue contribution from mioTV to increase significantly from FY2010. This is because we anticipate a large number of BPL fans to switch from StarHub’s cable TV to SingTel’s mioTV in 2010. In fact, we are projecting mioTV revenue of S$89m, S$295m and S$335m for FY2010F, FY2011F and FY2012F respectively. As SingTel will not charge more than the existing payment by StarHub customers for BPL matches and it paid a higher bid for the rights, we anticipate that it is likely to suffer a loss from offering BPL matches. However, we expect SingTel to benefit by gaining new customers from the offer of bundled mobile, Pay TV and broadband services to customers.

Merger between Bharti and MTN. Moreover, SingTel’s 30.4% owned associate, Bharti, announced that the merger between Bharti and MTN was not accepted by the South African government. This meant that SingTel’s interest in Bharti would not be diluted.

Maintain BUY recommendation and target price at S$3.80. Although SingTel paid a high price for the rights to BPL matches, it is likely to gain from strengthening its position as the number one telecommunications provider in Singapore. Furthermore, we expect SingTel and its regional mobile associates to benefit from the recovery in the global economy and report higher revenue and profit. Therefore, we maintain our buy recommendation and target price at S$3.80.

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