Author: tfwee
SingTel – BNP
SingTel wins Champions League rights
SingTel has won the rights to the UEFA Champions League and UEFA Cup for three seasons from 2009-12. While negative for StarHub, we do not expect major churn of sports channel subscribers. Separately, StarHub and M1 have teamed up with City Telecom to bid for NetCo stage of National Broadband Network. OVERWEIGHT. Top pick is StarHub.
SingTel wins media rights to UEFA Champions League
SingTel announced that it has been awarded the media rights to the UEFA Champions League and UEFA Cup for three seasons from 2009-20. While this looks very positive on the surface, we believe it is difficult to access the actual impact of this win as there are no details on how
much the group is paying for the rights. We are concerned that the group may have overpaid for this content and could fail to attract a significant subscriber base to justify the cost. As for StarHub, while the loss is negative, we do not expect major churn among its sports channel subscribers. The group still has the rights to the most valuable sports content, which is the Barclays Premier League, and remains the premier sports content provider in Singapore.
City Telecom, M1 and StarHub in joint bid for NetCo
Hong Kong’s City Telecom, M1 and StarHub have signed an MOU to form a consortium to bid for the NetCo stage of the National Broadband Network (NBN). We reiterate our view that it is not imperative to win the bid as the NBN will likely be highly regulated by the Singapore government. While the playing field will likely be leveled by 2015 as a result of this open-access network, we do not expect foreign competition given the small market and expected high broadband saturation by then. We believe what would differentiate one operator from the other would still be Cable TV content which StarHub has the edge.
M1 launches three new tariff plans
M1 has launched three new tariff plans known as SunSaver, SunSaver Plus and SunMax. There are no changes in tariff rates but only minor enhancements such as free unlimited local calls to three M1 numbers, and per-second billing, etc. M1’s new tariffs are priced very similarly to
SingTel and StarHub. We believe this reinforces our view that mobile competition in Singapore is likely to stay rational, even with the implementation of mobile number portability, as none of the operators have resorted to reducing their tariffs.
Stay OVERWEIGHT on telco sector; StarHub is top pick
We remain OVERWEIGHT on the telco sector. StarHub stays as our top pick, while we also have a BUY call on SingTel. M1 remains a HOLD.
M1 – BT
Montefiore earned $1.25-1.5m last year
MOBILEONE Ltd, Singapore’s smallest mobile phone company, paid chief executive officer Neil Montefiore between $1.25 million and $1.5 million in 2007.
Mr Montefiore, 55, was also given 940,000 share options last year, the company said in its latest annual report. A year earlier, he was paid a similar salary and was awarded 880,000 options.
Companies listed in Singapore are not required to disclose executives’ pay more precisely than in bands of $250,000. M1’s net income rose 4.4 per cent to $171.8 million in 2007, while sales climbed 3.9 per cent to $803.3 million.
StarHub Ltd, Singapore’s second largest phone company, paid chief executive officer Terry Clontz between $3 million and $3.25 million last year, according to its 2007 annual report. That is a decline from 2006’s $3.25 million to $3.5 million.
Mr Clontz’s pay in 2006 included a one-time so-called economic value- added ‘incentive’ due to previous years’ performance, Jeannie Ong, StarHub’s spokeswoman, said. His 2006 pay would have been between $3 million to $3.25 million without the economic value- added payment, Ms Ong said.
Mr Clontz also sold $1.4 million worth of shares in Singapore’s second largest phone company, according to a regulatory filing yesterday.
US-born Mr Clontz, sold 461,000 shares, or a 0.03 per cent stake, at an average of $3.08 each on Monday, the company said in a statement to the Singapore Exchange. The sale cuts Mr Clontz’s stake to 0.42 per cent, or about 7.2 million shares.
‘Under the US tax law, all US citizens are taxed on their full world-wide income,’ StarHub spokeswoman Jeannie Ong said in a statement. ‘Terry is planning to sell a portion of his performance shares for tax and financial planning reasons.’ – Bloomberg
StarHub – CIMB
Concerns are lifting
• Concerns are lifting. StarHub’s range-bound share price over the past 12 months reflected swelling concerns on potential risks from SingTel’s mioTV threat, mobile number portability (MNP) and Next-Generation Broadband Network (NGNBN). We are seeing signs that this wall of worry is receding, setting the stage for sustained share price advance.
• Cable TV could surprise to the upside in 2008. StarHub has beefed up its cable TV offerings in 2H07 to spur both subscriber growth and take-up of add-on packages in 2008. We also believe that the impending launch of Video on Demand (VOD) in 2H08 is likely to benefit from pent-up pay-per-view demand for StarHub’s unrivalled content library. Sports Group re-pricing which only took effect from October 2007 also provides tailwind to 2008 revenue growth.
• Scope remains for upgrades to consensus dividend expectations. Consensus is expecting CY08 yield of 5.9%, based on StarHub’s commitment to a minimum DPS of 18 cts. We expect consensus estimates to creep towards our CY08 DPS of 30 cts (9.8% yield), mostly funded by free cashflow. Our view is supported by StarHub’s end-07 capital structure of 1.3x net debt/EBITDA which is below the 1.8x target.
• Reiterate Outperform with unchanged DCF-based target price of S$3.76 (WACC: 6.9%, growth: 1%). StarHub remains our top pick for the Singapore telco sector. We like StarHub for its exposure to the telco services consumption growth spurred by Singapore’s rise as a key global city, its unrivalled triple-play proposition and robust 9.8% yield prospects backed mostly by free cash flow.
SingTel – OCBC
Wins UEFA Champions League Media Rights
Wins CL Media Rights from 2009-2012. Singapore Telecommunications (SingTel) has won the coveted media rights to the UEFA Champions League (CL) and UEFA Cup 2009-2012. Under the agreement, SingTel has the exclusive media rights across its mobile, Internet and mio TV platforms. SingTel plans to stream UEFA CL games both “live” and on-demand on mio TV, and the Internet via its IDEAS portal. It will also offer clips on its mobile service.
Pricing yet unknown. Pricing details are not available yet, but based on the current cost structure, viewers need to fork out an additional S$117.70 just to activate mio TV (S$53.50 for installation charges, S$64.20 for a phone modem) and also spend a minimum of S$16.05 monthly on its channels. Given the steep initial charge, we can expect SingTel to come up with promotional packages to encourage viewers to sign up closer to the telecast date (August 2009). So for now, we do not expect it to boost SingTel’s fledging mio TV base.
Minimal impact on StarHub. As for StarHub, where the CL has historically been shown on ESPN and STAR Sports at no additional cost to its sports subscribers, we do not expect any major setback; the Barclays Premier League (BPL) remains the crown jewel. Currently, StarHub subscribers pay S$25 for the Sports Group (BPL, FA Cup, England internationals and Spanish League) on top of S$24 for three Basic Groups. According to media reports, StarHub says it has no plans to reduce subscription rates in the wake of SingTel’s coup.
Sports fan may be the losers. Soccer fans, caught in the crossfire, are the likely losers in the latest development. Besides having to install additional hardware to receive mio TV, they would have to pay more in subscription fees; we estimate that for them to watch both the BPL and CL matches, they would have to fork out at least S$65.05 per month, an increase of 33% from August 2009, assuming SingTel does not charge extra for the CL telecasts.
BUY for defensive nature. Until we get a clearer picture of SingTel’s pricing structure, we maintain our estimates for now. As we also do not expect any major impact on StarHub, our figures remain unchanged. Nevertheless, we continue to like both the telcos for their defensive nature and retain our BUY ratings, with a fair value of S$4.35 for SingTel and S$3.51 for StarHub.
Source : OCBC Securities
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.