Month: April 2009
TELCO – Phillip
NGNBN OpCo Winner
StarHub is the winner. The Infocomm Development Authority of Singapore (IDA) announced that it had selected StarHub as the Next Generation National Broadband Network Operating Company (NGNBN OpCo). StarHub will establish Nucleus Connect to install equipment for the active infrastructure. It will invest about S$100m and receive S$250m grant from the government for the network. Nucleus Connect will work with OpenNet, which will lay the cables for the network. OpenNet comprises Canada-based Axia and three local companies, SingTel, Singapore Press Holdings and SP Telecommunications.
Commercial services start from 2010. Nucleus Connect is expected to start commercial operations in 1Q 2010. Moreover, by June 2012, 95% of homes and offices can expect to have access to high-speed broadband Internet access.
Nucleus Connect will offer a wholesale price of S$21 per month for a 100 Mbps residential end-user connection and S$121 for a 1Gbps connection. For nonresidential purposes, it will offer a wholesale price of S$75 per month for a 100 Mbps connection.
Impact from NGNBN. Nucleus Connect will also be bringing more retail service providers in addition to the three existing players, SingTel, StarHub and M1. We expect greater competition in providing Internet services and the losers are likely to be the existing players. The benefits will be lower costs and faster access for consumers. In fact, we expect the retail price to range from S$25 to S$30 for a 100 Mbps residential end-user connection and S$140 to S$160 for a 1Gbps connection.
SingTel and StarHub are expected to see erosions in profit margins due to more competitors offering lower retail prices. For M1, which is currently the smallest player in the Internet business, we expect it to grow its Internet subscriber base as there is now greater clarity in the cost of wholesale Internet services. M1 does not have Pay TV and will have to grow its Internet business segment to maintain its revenue growth.
Stock recommendation. Currently, the Internet segment contributes 9.3% and 11.9% to the total revenue of SingTel and StarHub in FY2008 while M1 is a new player in the Internet market. We have reduced the revenue estimates for the Internet segment for SingTel and StarHub slightly from FY2010F onwards to reflect the lower retail prices. We have also increased the revenue estimate for the Internet segment for M1 from FY2010F onwards to reflect the likelihood of it gaining new subscribers. Nevertheless, as the revenue from Internet business constitutes only a small portion of the total revenue of the three telecommunications operators, there is no impact on our ratings and fair values for SingTel, StarHub and M1.
SingTel – BT
SingTel eyes online SME sales growth
Telco sees new Net store as another prong to reach SMEs
BULLISH on online sales, Singapore Telecommunications is set to ramp up its newest Internet shopping foray by offering more products and services through this sales channel, with an increased focus on small and medium-sized enterprises (SMEs).
In an interview following the launch of Business SingTelShop last week, the telco’s vice-president of business sales, Dumas Chin, told BizIT that ‘broadband, mobile applications and a range of business solutions’ will soon be sold through this store, which targets SMEs.
‘We are exploring the feasibility of offering solutions such as the SingTel HRAssist hosted HR (Human Resource) solution, and also our desktop security solution,’ said Mr Chin.
‘We expect more SMEs to make their purchases through this online store. We want to cater to the evolving buying preferences of our customers, who are increasingly becoming Web-savvy. The Business SingTelshop was launched to serve the rapidly growing number of SMEs that are turning to the Internet for their communications needs, information and transactions.’
Telco rivals MobileOne and StarHub have also been selling products and services to their customers over the Internet.
Both telcos operate longstanding e-shops which are primarily aimed at consumers and individual shoppers.
StarHub, however, could join SingTel on its new online SME sales turf.
A StarHub spokesman last week told BizIT that the telco is seeing more local businesses embracing online shopping and is now mulling the feasibility of setting up an Internet store that, like SingTel’s e-shop, caters to the SME.
But for now the momentum is with SingTel. Flagged off last Monday, Business SingTelShop was created to be a one-stop online mall for SMEs in Singapore, who can search, browse and purchase – using their credit cards – mobile devices and services that are for use locally.
Fresh impetus
The foray adds to SingTel’s existing SME sales channels, which include telephone hotline services and sales outlets.
And it adds fresh impetus to the telco’s online sales momentum, adding a new prong alongside SingTel’s consumer-focused e-shop, which was launched late last year.
This is the first time SingTel is selling to its business customers directly over the Internet.
Mr Chin declined to be specific about sales expectations that SingTel has set for Business SingTelShop at this early stage. He said that SingTel ‘hopes to learn more about the online preferences and purchasing behaviour of our SME customers’.
In the past few months, SingTel has ratcheted up its efforts to woo SMEs. Last December, it rolled out a $99-per-month managed human resource management package called SingTel HR Assist. This hosted package lets SMEs manage employee data, payroll and staff leave online.
Last month, the telco launched a range of subscription-based infocomm technology (ICT) packages dubbed ‘Smart Packages’, which includes communications and IT services like telephony, mobile services, broadband, e-mail, Web hosting, desktop security, data back-up and others.
Mr Chin is confident SMEs will embrace shopping online, not least because it will be a cheaper way to shop, as ‘transactions performed online require significantly less paperwork and manpower – resulting in substantial cost savings’.
To entice SMEs to shop online, SingTel will be coming up with ‘best deals’ that specifically targets online SME shoppers, including special offers not available at other sales outlets, he added.
StarHub – BT
StarHub rolls out treats to retain mobile customers
STARHUB yesterday started a broad based campaign to retain and expand market share in its mobile pre-paid customer base. For the rest of this year, Starhub will roll out ‘Happy Treats’ every Sunday for its pre-paid customers. For its first treat, Starhub decided to reach out to its customers by giving away a familiar favourite, Old Chang Kee curry puffs.
Chief operating officer Tan Tong Hai joined StarHub’s management team to distribute the curry puffs at Ngee Ann City yesterday afternoon.
Chan Kin Hung, StarHub’s head of personal solutions and advanced multimedia services said, ‘We want to show our appreciation to our mobile pre-paid customers for their support all these years. Every Sunday for the rest of the year we will be giving away wonderful happy treats , turning each Sunday into a happy Sunday.
‘By showing their StarHub mobile pre-paid SIM card at selected Old Chang Kee outlets, our customers will receive a delicious curry puff for free. As many of them are from overseas, we are happy to introduce a local delight – the curry puff – to them.’
StarHub intends to give away 100,000 curry puffs at 25 selected Old Chang Kee outlets islandwide, this month. It has planned other Happy Treats in the upcoming months.
And its initial treat appears to have caught on, with a long queue of StarHub pre-paid customers waiting for their turn despite the gloomy weather to claim a free curry puff at the Chang Kee outlet at Ngee Ann City yesterday afternoon.
StarHub had 874,000 mobile pre-paid customers as of end 2008.
SPH – BT
SPH Q2 net profit down 12.6% to $87 mln
Singapore Press Holdings’s second-quarter net profit fell 12.6 per cent to $87 million from a year back, as the economic downturn led to shrinking profits for its print media business.
Recurring profit for the three months ended Feb 28, 2009 fell 16 per cent to $93.8 million, the group said today.
Revenue for its core newspaper and magazine segment fell 13.5 per cent to $204.6 million, while overall group revenue fell a narrower 3.7 per cent to $287.2 million.
SPH saw a 32.9 per cent rise in revenue from the property segment to $72.2 million, with Sky@eleven and Paragon contributing $16.3 million and $1.3 million respectively to the increase.
SPH has announced an interim dividend of 7 cents per share, payable on May 20.
SingTel – CIMB
The planets are aligning
• Falling risks and improving growth prospects. We believe SingTel’s outlook and risk profile continue to improve across the board.
• Lower risks at Optus. The Australian government’s decision to build the country’s broadband network has lifted concerns about Optus possibly being awarded the project, which would stretch the group’s finances. Also, the proposed merger between Vodafone and Hutchison Australia should rein in competition.
• Improving prospects in Indonesia. Telkomsel had added users at a faster clip in the first two months of 1Q09 despite seasonal weakness. Also, industry tariffs are creeping up, supporting our view that competition continues to pull back.
• Easing competition in India. We do not believe competition in India, which heated up in January, is sustainable. In fact, there are signs of easing price competition.
• Strengthening regional currencies. The market is expecting the Singapore government to allow the S$ to depreciate to support the ailing economy. This should benefit SingTel as it derives 72% of its PBT from overseas. The A$ and Indian rupee have appreciated 8% and 6% against the S$ in the last two months.
• Maintain OUTPERFORM, though we have lowered our FY09-11 core net profit estimates by 0.1-2.5% and sum-of-the-parts target price by 5cts to S$3.05, mainly after lowering our numbers for Bharti. Key re-rating catalysts could include qoq improvements in core net profits at its key units, strengthening regional currencies and further signs of an easing price war in India.