Month: March 2008
M1 – BT
M1 launches new plans as portability deadline looms
But rival StarHub says the per second billing feature is nothing new
MOBILE telcos are continuing to pull cards out of their sleeves as the June deadline for number portability approaches.
M1, the smallest of the three listed telcos, has launched three new plans with enhanced benefits and per second billing.
Among the enhanced features of M1’s new SunSaver, SunSaver Plus and SunMax plans in addition to per second billing are free unlimited calls to three M1 numbers, a free SMS bundle that also covers MMS, a free outgoing talk time bundle that is extended to cover video calls and free IDD calls to 19 destinations for a top-up of $5.35 a month.
‘M1 has always listened to our customers and these new plans reflect their changing needs and desires,’ chief executive Neil Montefiore said in a press release last week.
However, per second billing is not a new feature to billing plans and some of the other features are also being offered by its competitors. In a swift riposte StarHub said that it has been offering per second billing since it launched in 2000 and that its free IDD service does not have top-up charges.
‘We would of course like to point out that our per second billing is offered on all our plans – postpaid and prepaid, and not simply on selected postpaid plans,’ said head of services and solutions Adit Harinasuta.
‘All our mobile customers have been enjoying these benefits for a long time, and they are all smart consumers who know where the value is.’
Singapore Telecommunications last month launched an innovative add-on line package. Its RedPac service allows unused SMSes and call time to a second user. StarHub and SingTel have started offering add-on lines such as this for a fixed monthly fee of about $10 a month.
The only operator that has not yet launched such deals is M1. It only offers a service that lets a second user to be linked to a main line but does not allow the sharing of unused talk time.
With increasing mobile phone penetration reaching second-tier users like children and the elderly, the strategy of rolling out packages for the whole family could pay off for the operators that get in early.
SingTel – CIMB
SingTel wins media rights to UEFA for 2009-12
SingTel announced on 20 Mar 08 that it had been awarded exclusive media rights to the UEFA Champions League and UEFA Cup for 2009-12. These are exclusive rights across the mobile, Internet and mio TV platforms.
The UEFA Champions League is currently made available to Singapore sports fans via ESPN and STAR Sports, packaged by ESPN STAR Sports. ESPN and STAR Sports are sports channels under StarHub’s pay-TV services.
Comments
Strategically positive for mio TV but no significant bottom-line impact. We view this win as strategically important for mio TV’s long-term prospects but do not see material near-term earnings benefits for SingTel. The win should help increase takeup rates for SingTel’s mio TV which currently has around 27,000 subscribers vs. StarHub’s estimated 500,000 subscribers. However, we believe SingTel went in with a clear objective of outbidding its competitors and it remains to be seen how the win would benefit its bottom line.
Valuation and recommendation
Maintain Outperform and sum-of-the-parts target price of S$4.45. We continue to like SingTel for its highly liquid exposure to reliable earnings growth from regional associates and decent yield of 4%. Key catalysts could include news flow on its bids for Vietnamese telco assets in 2H08.
SingTel – BT
SingTel snatches slice of football telecast pie
It wins exclusive rights to screen Uefa Champions League here on mio TV, Internet
Singapore Telecommunications has muscled its way into the lucrative football pay TV market, beating ESPN Star Sports (ESS) to secure the exclusive rights to screen Uefa Champions League and Uefa Cup football matches in Singapore from next year.
The three-year deal will begin when the European football season kicks off in August 2009 all the way until the Champions League final is played in May 2012.
Under the agreement, SingTel will hold all the media rights across its mobile, Internet and mio TV platforms.
The plan is to stream the matches both ‘live’ and on-demand on its fledgling pay TV service – mio TV – and online through its IDEAS portal. Those on the go can also download clips of the games onto their mobile phones.
This is widely regarded as a major coup for SingTel, given that the Champions League is European club football’s most cherished prize. The current holders of the trophy are Italian giants AC Milan.
When contacted, an ESS spokesman said the company was ‘disappointed’ that it could not retain its rights to showcase the Uefa tournaments in Singapore past 2009.
StarHub, meanwhile, said that it did not enter the bidding for the rights, leading analysts to suggest that it was content with its existing deals that include the English Premier League (EPL) broadcast rights until 2010 and the upcoming Euro 2008 tournament in June.
Still, a StarHub spokesman described it as ‘unfortunate’ that ESS – offered as part of StarHub’s sports channels package – would not hold the rights to the two European tournaments after the current broadcast deal expires in 2009.
Yesterday’s announcement by SingTel came just a month after its chief executive for Singapore, Allen Lew, said that the telco would step up its efforts to buy more content for mio TV, which was launched last July.
Up to the quarter ending Dec 31, 2007, mio TV had just 27,000 subscribers on its books, just a fraction of the 500,000 people signed on with StarHub’s cable TV service. mio TV’s pulling power comes from being the first real challenger that rival StarHub has had on the market in recent years.
Giving his take on the deal, DMG & Partners Securities head of research Terence Wong said it was likely that this would give mio TV the boost it needed to gain a larger slice of the local pay TV pie.
‘This will garner a lot of attention, but I think football fans won’t mind paying, but it really depends on the price. But it’s definitely a big plus for SingTel,’ he told BT.
Expectedly, SingTel did not disclose the worth of the media rights, as is often the case in a competitive environment. In a statement, Mr Lew said SingTel did its research and found that sport ‘is a key genre that drives pay TV take-up’.
‘European soccer is a significant driver for people who subscribe to sport content,’ he said.
This means that football fans who want their fix of EPL and Champions League games will have to subscribe to the pay TV services of both SingTel and StarHub.
What mio TV’s on-demand service will offer, however, is to allow fans to watch the games at their convenience, instead of having to lose sleep to catch their favourite teams in action, as matches are often screened at 3am or 4am.
Next on SingTel’s football pay TV agenda is likely to be the EPL broadcast rights from 2010 onwards. Last month, Mr Lew said a renewed bid would be made once StarHub’s contract expires.
Doing so, however, is not expected to come cheap. Last year, StarHub paid an estimated $250 million to purchase exclusive EPL coverage – four times what it paid previously.
It then hiked the prices for its sports channels, which raised the ire of football fans across Singapore.
Telecoms – CIMB
Robust fundamentals remain underappreciated
• 2007 review: StarHub led EBITDA growth; SingTel gained subscriber share; M1 fell behind. All three telcos benefited as sector revenue growth accelerated to 9% yoy (2006: 7% yoy) on the back of a growing population and rising ARPU from higher usage of telco services. However, sector margins were compressed as SingTel took advantage of the strong demand to pursue market share aggressively. StarHub leveraged its triple-play proposition to deliver the strongest EBITDA growth of 12% yoy. SingTel was the biggest winner of mobile subscriber market share but its EBITDA was flat yoy while M1’s EBITDA declined 3% yoy as its pure-play mobile proposition continued to be marginalised by competitors’ bundled offerings.
• 2008: topline growth with stable margins. We expect population growth and rising ARPU to drive sector topline further (+8% yoy) in FY08. SingTel is expected to keep competition keen in its pursuit of further subscriber share but competition is unlikely to escalate very much from here. Margins should be relatively flat yoy in 2008 as telco operators focus on cost-efficiency gains to offset incremental subscriber acquisition costs. We expect StarHub to post the strongest EBITDA growth of 12% yoy again in 2008 on the back of ARPU growth.
• Attractive yield support from robust free cash flow. Singapore telcos are generating robust free cash flow and remain below their capital-structure targets. We believe there is flexibility to return the entire free cash flows to shareholders while keeping sufficient ammunition for strategic investments. We expect the sector to deliver an average yield of 7.4% for 2008 with StarHub offering the highest prospective yield of 10%, funded mostly by free cash flow. This should be followed by M1 and SingTel with prospective yields of 8% and 4.5% respectively.
• Mobile number portability (MNP) and Next Generation National Broadband Network (NGNBN) are unlikely to worsen competition. Downside risk from MNP is limited as industry players had taken the necessary steps to defend their subscriber base through the most of 2007, as reflected in higher subscriber acquisition costs. We also believe that NGNBN is unlikely to induce margineroding competition, based on our analysis of NGNBN’s business model, the government’s objectives and incumbents’ competitive advantages.
• Maintain Overweight with StarHub as our top pick, followed by SingTel. We expect telcos to continue to outperform the STI in view of an extended period of market risk aversion. StarHub offers ARPU-driven EBITDA growth potential combined with strong capital-return potential. We have above-consensus dividend/capital return expectations of 10% for StarHub. SingTel offers liquid exposure to reliable earnings growth from blue-chip regional associates and a decent yield of 4.5%. Potential news flow on bids for Vietnam’s telco assets in 2H08 could provide share-price catalysts. M1 remains a highly defensive yield stock with prospective yields of 8% but lacks catalysts.