TELCOs – CIMB

Singapore visit takeaways

From our recent visit to the Singapore telcos, we gather that StarHub is currently in talks with FA Premier League (FAPL) but we believe that the rights to the Barclays Premier League (BPL) matches are less attractive given the limited time before the season starts.

We also note that competition in fibre broadband has intensified. We maintain Underweight on the sector as de-rating catalysts are expected from SingTel given regulatory and competitive risks. Our top pick is StarHub.

What Happened

We recently met up with M1 and StarHub. Key takeaways are:

StarHub: It has begun talks with the FAPL for the rights to broadcast the Barclays Premier League (BPL). No decision has been made at this juncture. It also does not plan to hire a new COO as its current CEO will be able to take on both the roles. Competition in fibre broadband is increasing, mainly sparked by smaller players like MyRepublic and ViewQuest. StarHub also noted that the average consumption of mobile data by its subscribers has increased from below 1GB/month to 1-2GB/month.

M1: Its fixed broadband segment is now EBITDA-positive but it guided that it will be lower than the overall group’s margin going forward. It expects mobile ARPUs to rise as customers recontract into tiered data plans. M1 expects its capex to peak in 2013 before declining in 2014, albeit still higher than in 2012.

What We Think

StarHub: We think that it is now less compelling for StarHub to acquire the rights to the BPL given that there is limited time left to garner sponsors and advertisers. On top of that, we believe that SingTel has had a head start in locking in most of the BPL fans as subscribers under mioTV.

M1: We expect mobile ARPUs to rise as data usage increases. SingTel has also said it plans double its charge to S$10.70/GB for users exceeding their data quota which will help SingTel to further monetise data. We also expect the overall subsidy for handsets to fall yoy as there are more mid-end 4G devices available in the market.

What You Should Do

We reiterate our Underweight call on the sector given the lack of re-rating catalysts and heightened regulatory and competitive risks.

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