SingTel – DBSV

Apple, Airlines and AirTel

SingTel keen to reduce its reliance on Apple and plans to use “airlines model” to service customers. Target to double non-carriage business in Singapore over the next 3 years.

Bharti AirTel confirmed end of price wars in India and expects an improved Zain next year. Telkomsel highlighted price inelasticity in Indonesia, effectively ruling out price wars.

BUY for ~6% yield & earnings recovery in FY12F. Trading at 12.1x FY12F, below historical average of 13.4x.

SingTel partnering with smartphone vendors. SingTel is developing several apps, customized for Singapore. Three of the most popular apps are AMPed, BPL and “I love deals”. Currently AMPed and “Traffic Live” apps are pre-loaded on smart phones from vendors like Samsung, Ericsson and are only available to SingTel subscribers. SingTel also plans to work with vendors like Dell and ZTE in the future for more customized phones. If successful, this may differentiate SingTel offerings while lowering subsidy burden. SingTel revealed its plan to service premium mobile customers, by adapting “airlines model” of offering first-class and business-class kind of service levels.

Inflection point for non-carriage business in Singapore. Management aims to grow its non-carriage (IT & pay TV) business contribution from 25% to 45-50% within 3 years. IT business should benefit from increasing focus on cloud computing where SingTel is far ahead of its peers, while pay TV business should benefit from continued subscriber addition of at least 20K subscribers each quarter.

Bharti led FY11F decline, should lead FY12F recovery too. Bharti confirmed stable competition in India with hopes of an improvement from Zain next year. Bharti could surpass our forecast of 10% earnings growth in FY12F (March YE), if Zain transformation remains on track. SingTel is trading at ~6% yield for FY12F, which we deem too attractive for a blue-chip company.

SingTel – DBSV

Apple, Airlines and AirTel

SingTel keen to reduce its reliance on Apple and plans to use “airlines model” to service customers. Target to double non-carriage business in Singapore over the next 3 years.

Bharti AirTel confirmed end of price wars in India and expects an improved Zain next year. Telkomsel highlighted price inelasticity in Indonesia, effectively ruling out price wars.

BUY for ~6% yield & earnings recovery in FY12F. Trading at 12.1x FY12F, below historical average of 13.4x.

SingTel partnering with smartphone vendors. SingTel is developing several apps, customized for Singapore. Three of the most popular apps are AMPed, BPL and “I love deals”. Currently AMPed and “Traffic Live” apps are pre-loaded on smart phones from vendors like Samsung, Ericsson and are only available to SingTel subscribers. SingTel also plans to work with vendors like Dell and ZTE in the future for more customized phones. If successful, this may differentiate SingTel offerings while lowering subsidy burden. SingTel revealed its plan to service premium mobile customers, by adapting “airlines model” of offering first-class and business-class kind of service levels.

Inflection point for non-carriage business in Singapore. Management aims to grow its non-carriage (IT & pay TV) business contribution from 25% to 45-50% within 3 years. IT business should benefit from increasing focus on cloud computing where SingTel is far ahead of its peers, while pay TV business should benefit from continued subscriber addition of at least 20K subscribers each quarter.

Bharti led FY11F decline, should lead FY12F recovery too. Bharti confirmed stable competition in India with hopes of an improvement from Zain next year. Bharti could surpass our forecast of 10% earnings growth in FY12F (March YE), if Zain transformation remains on track. SingTel is trading at ~6% yield for FY12F, which we deem too attractive for a blue-chip company.

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