StarHub – BT

StarHub shares buck market decline

STARHUB was the only telco to emerge unscathed from the trading bloodbath yesterday as investors continue to be spooked by the prospect of a credit rating downgrade and bleak economic signals in the United States.

Shares of Singapore’s second-largest operator closed four cents higher yesterday at $2.91, resisting a wider market fallout which saw the Straits Time Index fall 1.47 per cent or 46.75 points to 3,130.34.

StarHub, which reports its second quarter results later today, was among a handful of counters to buck the downtrend. Its rally also came on the back of a recent analyst downgrade. On Monday, BNP Paribas had changed StarHub to hold from a sustained buy rating.

‘We see few short-term catalysts that could re-rate the stock in the next 12 months,’ BNP Paribas analyst Foong Choong Chen said in his research note.

Local operators will find it difficult to profit from the mobile data boom in the medium term due to heavy handset subsidies and generous cellular Internet bundles. For StarHub, an increase in capital expenditure as a result of investments in subsidiary Nucleus Connect means there is little hope of raising shareholder payouts or declaring a special dividend, he added.

While market watchers say defensive plays such as telcos could find favour with investors in light of lingering uncertainty in the US, the StarHub rally was not repeated across the board yesterday.

Rivals Singapore Telecommunications slipped six cents to $3.32 on fears that Bharti Airtel could continue to weigh down its bottom line. SingTel’s largest overseas associate yesterday reported a 28 per cent drop in its first-quarter net profit to 12.15 billion rupees (S$330 million).

M1 shares edged down by one cent to end trading at $2.58.

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