SingTel – Lim and Tan
Indian Connection Not As Strong
• Bharti Airtel, 31.9% owned Indian associate of Sing Tel, has reported its first quarterly drop in profit (-8.2%) in the March quarter , reflecting the bloody competition in the mobile market in India, where Bharti’s dominant market share actually declined in the quarter, to 22.6% from 24.6%.
• Unfortunately for Sing Tel, its share price performance has been increasingly tied to Bharti’s & its developments, eg
– the unsuccessful bid last year for MTN of South Africa;
– currently on-going acquisition of Zain Group‘s operations in Africa ex-Sudan and Morocco for US$10.2 bln; and
– the current intense bidding war for 3G licenses. (Citigroup thinks it could hit US$2 bln a piece.)
• We remain NEUTRAL on Singapore’s largest market cap stock.
• At $3.02, yield is 4.6%. This assumes 10% increase in the final dividend to be declared, to 7.6 cents, in line with the 10% higher interim dividend of 6.2 cents.
• Sing Tel will release result for ye Mar ’10 on before market opens on Thursday May 13th.