SingTel – OCBC

Adds 45k Pay TV subscribers

Adds 45k Pay TV subs. SingTel has added another 45k Pay TV subscribers over the last four months, growing its mio TV base from 155k to 200k, an increase of 29%. As a recap, SingTel now holds the exclusive broadcast rights for the widelyfollowed Barclays Premier League (BPL) 2010-2012 seasons; SingTel has scored another coup over StarHub by securing the exclusive broadcast rights to a suite of sports networks and services from ESPN STAR Sports (ESS) from mid-2010. As the deals were secured before the recent Pay TV revamp in Mar, these will only be transmitted via SingTel’s mio TV setup.

Little impact on FY10 numbers. Despite the sharp jump in new Pay TV adds, we do not expect them to have any impact on FY10 numbers. We believe that the bulk of its new subscribers may be paying nothing until the actual broadcast of the BPL in Aug 2010; the ongoing promotion for its mio TV also offers the free broadcast of the 2010 Champions League and Europa League matches. For home subscribers, SingTel is charging a monthly subscription of S$23 (before GST) for BPL and for S$2 more, they can get additional ESS channels. We understand that commercial subscribers will need to pay around S$598 (before GST) per month. As such, we are likely to see the full impact of its increased Pay TV subscriber base in its 3QFY11 results (ending Dec 2010).

4QFY10 results likely to be upbeat. Having said that, we still expect its 4QFY10 results – likely due out by mid-May – to be fairly upbeat as per its guidance for FY10; SingTel had earlier guided for its Singapore operational EBITDA to grow at low single-digit level and for its Australia operating revenue and EBITDA to grow at low single-digit levels; SingTel expects both Bharti and Telkomsel (its two largest contributors) earnings to grow in local terms, although it notes that ordinary dividend will be lower. For 4QFY10, we expect net profit to come in around S$673.2m on revenue of around S$3391.3m; for FY10, we estimate that SingTel will post revenue of S$15791.6m and net profit of S$3565.3m.

Maintain BUY. With its FY10 results due soon, we hold off revising our FY11 estimates; but we remain upbeat about its prospects on the back of a likely faster-than-expected recovery in its associate earnings and opportunities presented by the NBN. As such, we maintain our BUY rating and S$3.51 fair value.

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