Author: tfwee
StarHub – BT
Former M1 chief to take the reins at StarHub
Neil Montefiore will take over the post from Terry Clontz who will be retiring
The maxim ‘know thy self, know thy enemy’ is taking on new meaning in Singapore’s telecommunications battleground.
In a move which surprised most industry watchers, StarHub yesterday announced the retirement of long-standing chief executive Terry Clontz. To fill the upcoming void, Singapore’s second largest operator is turning to the former helmsman of the country’s smallest telco MobileOne – Neil Montefiore.
Mr Montefiore, who left M1 only in February this year, will re-emerge as StarHub’s CEO exactly a year later. Mr Clontz will relinquish his CEO role in January 2010 but will continue to be a director of the company, StarHub said in a statement.
The change-of-guard is subject to the approval of telecommunications regulator the Infocomm Development Authority of Singapore.
‘This comes as a complete surprise to me,’ said DBS Vickers analyst Sachin Mittal.
‘There were no rumblings in the market before this (announcement),’ added OCBC analyst Carey Wong.
Mr Clontz, 58, joined StarHub in January 1999 as its founding president and CEO, steering the firm through its merger with Singapore Cable Vision in 2002 and its listing in 2004.
‘Terry has led StarHub from a fledgling new entrant to a leading quad-play listed entity. At StarHub, he is known for his innovative ideas, clear vision and cohesive strategies,’ said company chairman Tan Guong Ching.
Mr Montefiore on the other hand, left M1 for ‘personal reasons’ in February after nearly 13 years of service, resulting in the appointment of its veteran chief financial officer Karen Kooi as the new CEO two months later.
Mr Montefiore re- emerged at several major telecommunications conferences shortly after as a ‘telecommunications consultant’.
While Mr Montefiore’s new appointment may have caught most industry watchers off-guard, the switch looks to have been sealed at the time of his resignation from M1.
In an interview with a telecommunications news site in March, Mr Montefiore was quoted as saying he wants to ‘work as an independent consultant for 12 months, before beginning a new role – as yet unspecified – in 2010’.
When contacted, M1 declined to comment if his move to StarHub had violated any contractual obligations. However, industry observers believe the one- year buffer could be a result of a non-compete clause in his former contract.
‘He’s (Mr Montefiore) definitely someone who knows the local market and he also knows the competitor,’ said DBS Vickers’ Mr Mittal.
While Mr Montefiore may be an old hand in the mobile sector, he may need ‘some time to get up to speed’ with StarHub’s pay- TV and broadband businesses, according to OCBC’s Mr Wong.
‘Time is a luxury that StarHub may not have with the NBN (national broadband network) coming on board in 2012,’ he added.
Once Singapore’s new fibre-optic network comes online at the end of 2012, the combination of breakneck Internet speeds and a more open regulatory regime is widely-expected to intensify competition for all three local operators.
SingTel – BT
SingTel goes on App store offensive
It will start selling software to SMEs and mobile users
SINGAPORE Telecom is going all out to get software developers to back its new online applications stores.
In its latest effort to move beyond pure Internet and telecommunications services, SingTel will start selling software to small and medium enterprises (SMEs) and mobile users through two new Web-based stores.
The first site will retail mainly business software such as accounting, human resource and computer security applications to SMEs. These tools will be offered to customers over the Web for a monthly subscription fee.
This model has been gaining popularity in the past few years as it does away with upfront capital investments in new hardware and support staff.
For a start, seven applications will be offered through SingTel’s SME applications store. And potential buyers can try them for up to two months before deciding whether to buy, according to Bill Chang, executive vice-president of SingTel’s business group. ‘Every quarter we’ll have 20 to 30 more business applications. Hopefully, maybe more,’ he said.
SingTel’s second Web store will be devoted to mobile applications such as games and educational software, mirroring moves by phone giant Nokia and Apple.
But SingTel’s Web store will not be aligned to a specific handset brand. Instead, it will offer more than 1,300 applications for various phones ranging from Nokia’s Symbian-based devices to HTC’s Android-powered handsets.
To help stock the new Web stores, SingTel has forged a partnership programme with support from the Infocomm Development Authority of Singapore and IE Singapore.
Through this, the telco hopes to woo developers by giving them access to its technology infrastructure and huge pool of customers.
Mr Chang said SingTel will help developers commercialise applications and help promote them to its regional users.
SPH – OCBC
Stabilisation Not Equal Recovery
Remains sluggish overall. Singapore Press Holdings (SPH) reported its 3Q09 results with a topline of S$331.2m (-4.8% YoY) while bottomline came in at S$126.7m (-5% YoY). The group experienced an 18.9% reduction in staff costs as the effects of its recently announced pay cuts flowed through the system. However, its core operations dived 13.5%, signalling that the group might still be in for a bumpy ride in the next few quarters.
Key swing factors: Property & Investment. Its property division continued to chalk up a 40% YoY rise in revenue due to stronger-than-expected progress recognition from its Sky@Eleven condo project. However, rental growth from Paragon has started to flatten out and we are pensive on its ability to continue upward rent revisions. SPH’s investment income was another swing factor. While it incurred a 31% YoY fall, it managed to register a S$17.6m absolute gain (mostly due to stronger portfolio valuation) compared to a loss of S$104k in the previous quarter. In view of the volatile market, we opt to retain our conservative estimates for SPH’s investment income.
Display and Classifieds still at rock bottom. SPH continues to have a short runway of visibility for its core business, indicating that businesses are still keeping their advertising belts tightened. SPH’s Display and Classifieds adverts are still experiencing short printing notice periods of 1- 3 weeks and 5-7 days respectively. Businesses are also choosing to utilise black & white or single colour adverts vs. full colour adverts. As such, despite seeing a positive uptick in advert pages printed, profitability remains suppressed. We were updated that all advertising segments are still declining/flat, with the telecoms and finance segments experiencing the most sluggish performance. The only silver lining for advertising lies in the recent acceleration in property launches.
Final quarter will not see recovery. The Great Singapore Sale (GSS) may be able to buffer declines on a QoQ basis but we opine that it would still pale to the comparable GSS quarter in the previous year. We are maintaining our earnings estimates but have bumped up our SOTP valuation in view of a better-than-expected valuation for Paragon at S$1.98b (prev: S$2b valuation). We had estimated S$1.8b. We are retaining our HOLD rating with a SOTP fair value of S$3.31 (prev. S$3.18). Our forecast of 14.5 S cents for SPH’s final dividend can yield 4.7% if investors accumulate around S$3.05.
SPH – DBS
Riding on economic recovery
• 9M09 advertising revenues fell YoY (-17%) but expect sequential improvement
• Latest Paragon valuation at $1.98bn, wide margin vs the $1.5bn we imputed in our sum-of-parts TP
• Expect performance to ride on economic recovery
• Reiterate Buy, SOP TP: S$$3.68
3Q09 ad revenues – no surprises. Headline revenue ($327m, -5% yoy) and operating profit ($137m, -2% yoy) were within expectations. At its newspaper division, classifieds revenue dropped slightly more than expected on lower job ads ($55.9m, -30% yoy), but display ads revenue ($90.3m, -17% yoy) was within expectations. Newsprint charge-out rate remains high at US$779/mt (+32% yoy), but down -6% from 2Q’s US$827/mt. We expect newsprint
charge-out rate to trend down further in 4Q.
Property the star. Property division helped prop up operating revenue, with revenue recognition from Sky@Eleven ($64m, +69% yoy) and Paragon’s rental ($30m, +3% yoy). Occupancy at Paragon remains at 98%, while Sky@Eleven is on track for TOP by 2010.
Paragon latest valuation at $1.98bn. This is 4% below the last valuation of $2.07bn done in Jul 08. However, it is still more than 30% higher than the $1.5bn estimate we have imputed in our sum-of-parts target price, implying a huge margin of safety.
Riding on economic recovery. DBS Group economist recently revised up his Singapore GDP forecasts for ’09 to -5.5%, from -6.6% previously. We maintain our view that we should see sequential improvement in the Group’s advertising revenues on the back of the economic recovery.
Buy, TP at S$3.68. Our operating profit forecasts remain intact, but we trimmed FY09F earnings down by 8% as we adjust for a lower return on its investment. We reiterate our Buy recommendation and SOP TP at S$3.68, on our view that the worst is over. Dividend yield at 6.2% also looks reasonable on our conservative DPS assumption of 20cents. Our TP would have been S$3.97, if we peg our TP to Paragon’s latest valuation of $1.98bn.