Author: tfwee
SingTel – BT
SingTel, STT file appeals in Jakarta
They’re fighting lower court decision that they broke anti-monopoly law
SINGAPORE Telecommunications and sister company Singapore Technologies Telemedia (STT) yesterday filed their respective appeals with Indonesia’s Supreme Court against a lower court decision that they broke the country’s anti- monopoly law.
Parent Temasek Holdings had on Wednesday filed its appeal with the Supreme Court against the ruling of the District Court of Central Jakarta which upheld the KPPU findings.
KPPU, Indonesia’s business competition watchdog, had said that Temasek and its affiliates had violated antitrust laws in their cross-ownership of the country’s two biggest telcos.
Temasek has an indirect stake in PT Telkomsel through SingTel, which owns 35 per cent of the telco.
Separately, Temasek’s wholly owned subsidiary STT holds a 40 per cent stake in Indosat, the second-largest telco, through its unit Asia Mobile Holdings.
The court had set a 12-month deadline for Temasek and its affiliates to give up one of the stakes in one of the telcos or cut their shareholdings in the two telcos by half.
A SingTel spokeswoman said yesterday that the court’s decision was wrong and without any credible basis.
‘We maintain that the decision by KPPU is wrong and is not supported by law or adequate evidence,’ she said.
SingTel and wholly owned SingTel Mobile do not own majority shares in any Indonesian company, she said.
SingTel Mobile is only a minority investor in Telkomsel and does not control its operations.
Telkomsel is majority- owned and controlled by PT Telkom, she said.
STT in a statement said that ‘contrary to the District Court’s decision, STT is not part of a ‘single economic entity’ with Temasek Holdings and SingTel, as it acts independently’.
STT, which acquired its Indosat shares from the Indonesian government following an invitation to participate in a privatisation in 2002, has never held a majority of shares in Indosat, the company said.
‘It has never assumed a dominant position to charge Indonesian consumers excessive prices, as tariffs are regulated by the Indonesian authorities and determined by the operators,’ it said.
Goh Yong Siang, Temasek Holdings managing director, strategic relations, said that Temasek has not broken any laws and will vigorously contest all allegations against it.
‘We fully respect the laws of Indonesia and hope that all our legal rights will likewise be respected,’ said Mr Goh.
‘As a long-term investor in Asia, we believe a just and impartial resolution of disputes is in the longer- term interest of Asia’s developing economies and her people. It is in this spirit that we intend to exercise all rights and remedies available to us for the orderly resolution of disputes.’
Thomson Medical – BT
Thomson Medical in Vietnam pact
THOMSON Medical Centre said that it has signed a subscription option agreement to take up a 25 per cent stake in a hospital in Vietnam that it helped plan.
The mainboard-listed healthcare provider did not say what the agreed price or the fair value of the hospital is. But it has been offered the same price per share as that paid for the founders’ shares.
The acquisition target is the Hanh Phuc International Women and Children Hospital. The private 260-bed hospital is located in Binh Duong province and will be completed in Q3 next year. The subscription agreement follows a five-year management contract inked in 2006 for Thomson Medical to plan and manage the Hanh Phuc hospital and two other hospitals in Vietnam.
The subscription pact was sealed between Thomson Medical’s wholly owned subsidiary, Thomson International Health Services, and Hanh Phuc International Women & Children Hospital Joint Stock Co (Hanh Phuc JSC), which owns the hospital. It may be exercised before the new hospital is three years old.
Thomson International also has a put option agreement with Prosper Joint Stock Co, a shareholder of Hanh Phuc JSC. The company has the right to sell its shares in the Vietnam hospital to Prosper JSC if its management contract is terminated during or after the five-year term. It may also do so if there is any significant change to the ownership or management structure of its Vietnamese partner.
The put option price was not stated, but it will be based on the fair value of Han Phuc JSC as assessed by an independent party jointly approved by the parties.
Thomson Medical has been making inroads into the Vietnam market in recent years. The company is planning to set up a fertility centre in Vietnam. For the six months ended February, the group posted a 28.3 per cent gain in net profit to $5.7 million.
Shares of Thomson Medical last traded at 65 cents on Tuesday.
SingTel – BT
SingTel tunes in mio TV on the go
SOCCER fans thinking about subscribing to SingTel’s fledgling pay-TV service for the 2009 UEFA Champions League now have another reason to sign up: besides catching the matches on their home TV, they can watch them on a 3G Nokia mobile phone.
From Saturday, SingTel pay-TV customers will be able to view 10 ‘live’ channels plus three with video- on-demand (VOD) on a compatible handset through the ‘mio TV on mobile’ service.
The channels include MediaCorp 8 and ChannelNewsAsia, China’s CCTV4, Dragon TV and Mei Ah, a Cantonese movie channel from Hong Kong. The VOD content is Mom-on-Demand and two channels dedicated to Korean drama series.
‘mio TV on mobile’ is billed as more user-friendly than existing 3G video streaming services offered by all three telcos. Instead of having to log on to a mobile Web portal, consumers simply download an application to their mobile phones.
By launching this tool, they will have access to an electronic guide with up to seven days’ programming information. They can also toggle between channels with the push of a button, much like using a standard remote control, according to SingTel’s vice-president of consumer marketing Wong Soon Nam.
‘What we want to do is to allow for a seamless user experience, whether it’s through the mobile or broadband,’ he told reporters at a briefing yesterday.
One drawback: the new service is supported only on 10 Nokia phone models such as the N76 and N81, but SingTel said more could be down the track.
The mobile programme line-up is extracted from SingTel’s mio TV service, an Internet offering it launched last July in a bid to break StarHub’s dominance of the pay-TV market.
Although mio TV offers nearly 43 channels, only 13 are currently available on its mobile counterpart due to licensing restrictions.
More content will be added and this could include streaming matches from the 2009 UEFA Champions League, Mr Wong hinted. This is because SingTel has secured cross-platform broadcasting rights for the sporting event, which allows it to screen the action over broadband and mobile networks.
Unlike existing 3G video streaming, consumers will not incur separate data charges for tuning in to SingTel’s mobile goggle box. The monthly subscription fee of $9.90 provides access to all 10 live channels and includes data transmission costs.
To entice users to sign up, SingTel is reducing the monthly charge to $6 and users will even get to use the service free until the end of July. This pricing excludes access to VOD content, which is charged at 50 cents per video clip.
SingTel – BT
SingTel, Bharti to form unit for MTN buy
India’s Bharti Airtel and partner Singapore Telecommunications (SingTel) plan to set up a separate company for the acquisition of South Africa’s MTN Group , the Business Standard paper said yesterday, citing unnamed sources.
The special purpose vehicle (SPV) will raise funds, including bridge loans, and may later sell American Depositary Receipts or Global Depositary Receipts to repay the debt, it said, citing sources close to the deal. The SPV would be a subsidiary of unlisted Bharti Telecom, which owns about 45 per cent in Bharti Airtel.
When contacted, a spokesman from SingTel, which has a stake of about 30 per cent in Bharti Airtel, declined to comment.
According to the paper, MTN would not be offered a stake directly in Bharti Airtel as that may push foreign ownership in the Indian firm beyond the limit of 74 per cent permitted by Indian law. ‘The move to float an SPV will help Bharti Airtel to continue being listed on Indian stock exchanges, while MTN’s (major shareholders) will be given a stake in the SPV,’ the paper said.
Bharti, India’s top mobile telecoms operator, could raise funds by diluting the equity of the SPV, or the stakes of Bharti founders or SingTel, it said.
Media and analysts estimate that Bharti may value MTN as high as US$50 billion. Merging the two firms would create the world’s sixth-largest mobile operator, with more than 130 million subscribers in around two dozen countries. A spokesman for Bharti declined to comment.
Bharti said last week that talks with MTN were preliminary and that no bid has been made. — Reuters
TELCOs – CIMB
Margin compression weighs in
• Margin concerns overshadow consumption growth optimism. EBITDA margin compression in 1QCY08 exceeded our expectations and Singapore telcos are now in unchartered waters with sector EBITDA margin at an all-time low of 34.6%. We believe that the systemic margin pressure exerted by SingTel is unlikely to ease soon and will overshadow telco service consumption growth in Singapore. Sector PBT growth is set to slow to 8% for 2008-09 as a result, down from 10% previously.
• 1QCY08 results review. SingTel’s market-share drive took its mobile subscriber share to 43%, the highest in 17 quarters. This came at the expense of sector EBITDA margin, which was driven down to 34.6% (-280bp yoy). StarHub was forced to respond to an aggressive SingTel, resulting in its sharpest EBITDA margin erosion (-200bp yoy) to date. M1 averted yoy EBITDA margin erosion with the help of a low base from heavy 10th anniversary promotions the year before.
• Will SingTel’s aggression ease soon? We would not bet that competition will ease once mobile number portability (MNP) comes on stream. We believe SingTel is in the midst of a strategic repositioning ahead of the rollout of a national broadband network and the push for market share could be extended. Market share offers SingTel the scale of return for strategic growth initiatives/investments e.g. pay TV content, upgrade of fixed network, new wireless services. This sets SingTel up to generate potentially better returns for future investments relative to StarHub and M1.
• Yields offer respite for StarHub and M1. StarHub and M1 continue to offer prospects of more than 8% yields on robust free cash flow. Earnings risk should be limited by SingTel’s EBITDA margin guidance of 40% (flat yoy) for FY09, which suggests that sector margins could stabilise during the course of the year. However, we do not expect a significant margin recovery in 2008-9.
• Maintain Neutral on the sector. In the current environment of increased competition within Singapore, SingTel’s diversified earnings base offers better downside protection than its peers. Singapore is only 30% of its earnings versus 100% for M1 and Starhub. It also has potential near-term re-rating catalysts from the MTN acquisition with Bharti. Between Starhub and M1, we prefer StarHub over M1 for its more diversified earnings. As a dividend yield hideout, our strategist prefers Media and S-REITs, over Singapore Telcos. Among regional telcos, our preference is for TM International.