Category: M1
TELCOs – BT
Pay-TV cross-carriage to start in August
FROM Aug 1, pay-TV operators here will have to offer their exclusive content to subscribers of competing operators.
The Media Development Authority’s (MDA) mandate, announced in March last year, will apply to any exclusive content that operators have acquired on or after March 12, 2010.
The newly-gazetted regulation means pay-TV operators must be able to make available this content within five days of request from the consumer, even if they belong to competitors.
This applies to ‘qualified content’, as spelled out by MDA in its Media Market Conduct Code. One of the definitions covers content acquired on an exclusive basis, not to that created by the TV provider. It also does not apply to content delivered over the Internet or mobile platforms
The qualified content shared must be cross-carried unmodified, and at the same price, terms and conditions as offered to a provider’s own subscribers.
Cross-carriage is aimed at eliminating the need for two pay-TV set-top boxes, reducing hassle for consumers as well as the costs involved in providing the requisite hardware for operators.
MDA announced the cross- carriage mandate in March last year after a fierce battle between StarHub and SingTel over the exclusive rights to broadcast the Barclays Premier League (BPL). SingTel was rumoured to have paid a king’s ransom of $300 million for the privilege, which subsequently saw its smaller subscriber base balloon 60 per cent as new users jumped on to watch the BPL.
After a two-month industry consultation, which drew wide- spread protests from content suppliers here, MDA decided to press on with its ruling, stating that cross-carriage would do away with anti-competition and stimulate service differentiation.
An MDA spokesman also pointed out that during the consultation, it found that exclusively acquired content was one of the most relied-on methods to populate service offerings by dominant providers.
The regulator decided, however, to delay implementation of cross-carriage by nine months to give the industry time to adjust to the new legislation.
MDA claims that since the introduction of the ruling, the pay-TV market has grown ‘significantly’, with retailers introducing 20 new channels, as well as new services brought to consumers.
MDA plans to review the ruling every three years, or as the industry requires.
One argument against cross- carriage came from the Cable and Satellite Broadcasting Association of Asia (Casbaa), which said such a practice would artificially suppress content prices and cause foreign media investments in the country to dry up.
TELCOs – BT
Pay-TV cross-carriage to start in August
FROM Aug 1, pay-TV operators here will have to offer their exclusive content to subscribers of competing operators.
The Media Development Authority’s (MDA) mandate, announced in March last year, will apply to any exclusive content that operators have acquired on or after March 12, 2010.
The newly-gazetted regulation means pay-TV operators must be able to make available this content within five days of request from the consumer, even if they belong to competitors.
This applies to ‘qualified content’, as spelled out by MDA in its Media Market Conduct Code. One of the definitions covers content acquired on an exclusive basis, not to that created by the TV provider. It also does not apply to content delivered over the Internet or mobile platforms
The qualified content shared must be cross-carried unmodified, and at the same price, terms and conditions as offered to a provider’s own subscribers.
Cross-carriage is aimed at eliminating the need for two pay-TV set-top boxes, reducing hassle for consumers as well as the costs involved in providing the requisite hardware for operators.
MDA announced the cross- carriage mandate in March last year after a fierce battle between StarHub and SingTel over the exclusive rights to broadcast the Barclays Premier League (BPL). SingTel was rumoured to have paid a king’s ransom of $300 million for the privilege, which subsequently saw its smaller subscriber base balloon 60 per cent as new users jumped on to watch the BPL.
After a two-month industry consultation, which drew wide- spread protests from content suppliers here, MDA decided to press on with its ruling, stating that cross-carriage would do away with anti-competition and stimulate service differentiation.
An MDA spokesman also pointed out that during the consultation, it found that exclusively acquired content was one of the most relied-on methods to populate service offerings by dominant providers.
The regulator decided, however, to delay implementation of cross-carriage by nine months to give the industry time to adjust to the new legislation.
MDA claims that since the introduction of the ruling, the pay-TV market has grown ‘significantly’, with retailers introducing 20 new channels, as well as new services brought to consumers.
MDA plans to review the ruling every three years, or as the industry requires.
One argument against cross- carriage came from the Cable and Satellite Broadcasting Association of Asia (Casbaa), which said such a practice would artificially suppress content prices and cause foreign media investments in the country to dry up.
M1 – DMG
Giving life to LTE
THE BUZZ
M1 has launched Singapore’s first commercial LTE network in selected parts of the republic. The coverage will be progressively expanded island-wide by 1Q2012. The telco is rolling out the service to enterprise customers first until more LTE enabled devices are available in the market.
OUR TAKE
Asia’s first. We believe M1 (29%-owned by Axiata) is the pioneer in the commercialization of a LTE network in South East Asia, having conducted trials over the past year. Its 2 rivals, Singtel and StarHub, plan to launch their LTE networks by 2012 and are in various stages of field test and trials in selected locations. M1 joins the ranks of a handful of mobile operators to have commercialized their LTE networks (mainly in Europe and the US), albeit on a small scale, with a string of trials and committed deployments across the globe. TeliaSonera was the first operator to roll out LTE in Norway back in Dec 2009.
First mover advantage constrained by lack of devices and fledgling ecosystem. While LTE is a natural progression for current 3G networks, early adopters are inherently constrained by the lack of handsets and devices, which are only expected to be made available on a wider scale from 2013. As such, we are not surprised that M1 is only making the service available to mobile broadband enterprise customers. This should give it ample time to fine-tune its LTE strategy, address technical glitches and assess other deployment strategies before making the high-speed network available to mainstream small screen customers. The service is currently available in Suntec City, Beach Road, Tanjong Pagar, Shenton Way, Chinatown, Marina Bay and Tanjung Rhu.
Maintain BUY. We are leaving our core net profit forecasts of SGD170.4m and SGD187.5m for FY11 and FY12 unchanged for now. While M1’s first mover advantage in LTE is positive in terms of its branding campaign, we see little upside in the short to medium-term until adoption reaches critical mass, accompanying the maturity of the 4G eco-system over the next 2-3 years. The stock’s key share price re-rating catalysts are: (i) the stronger than expected results going forward; (ii) potential for further capital management; and (iii) better than-expected take-up of its NGNBN service.
M1 – DMG
Giving life to LTE
THE BUZZ
M1 has launched Singapore’s first commercial LTE network in selected parts of the republic. The coverage will be progressively expanded island-wide by 1Q2012. The telco is rolling out the service to enterprise customers first until more LTE enabled devices are available in the market.
OUR TAKE
Asia’s first. We believe M1 (29%-owned by Axiata) is the pioneer in the commercialization of a LTE network in South East Asia, having conducted trials over the past year. Its 2 rivals, Singtel and StarHub, plan to launch their LTE networks by 2012 and are in various stages of field test and trials in selected locations. M1 joins the ranks of a handful of mobile operators to have commercialized their LTE networks (mainly in Europe and the US), albeit on a small scale, with a string of trials and committed deployments across the globe. TeliaSonera was the first operator to roll out LTE in Norway back in Dec 2009.
First mover advantage constrained by lack of devices and fledgling ecosystem. While LTE is a natural progression for current 3G networks, early adopters are inherently constrained by the lack of handsets and devices, which are only expected to be made available on a wider scale from 2013. As such, we are not surprised that M1 is only making the service available to mobile broadband enterprise customers. This should give it ample time to fine-tune its LTE strategy, address technical glitches and assess other deployment strategies before making the high-speed network available to mainstream small screen customers. The service is currently available in Suntec City, Beach Road, Tanjong Pagar, Shenton Way, Chinatown, Marina Bay and Tanjung Rhu.
Maintain BUY. We are leaving our core net profit forecasts of SGD170.4m and SGD187.5m for FY11 and FY12 unchanged for now. While M1’s first mover advantage in LTE is positive in terms of its branding campaign, we see little upside in the short to medium-term until adoption reaches critical mass, accompanying the maturity of the 4G eco-system over the next 2-3 years. The stock’s key share price re-rating catalysts are: (i) the stronger than expected results going forward; (ii) potential for further capital management; and (iii) better than-expected take-up of its NGNBN service.
M1 – CIMB
Launch of LTE
“Soft launch” of LTE
M1’s “soft launch” of LTE is not expected to have much impact on either its revenue or costs given the limited coverage and devices on offer. Moreover, the cost of the dongles is not too hefty at this point. We view this launch more as a publicity campaign to drum up support as coverage is widened and more devices are available as M1 typically likes to be the first to launch new services. There should not be any issue over spectrum as it, together with StarHub, has the highest amount of 1800 MHz spectrum. This should be sufficient for M1 to cope with any upsurge in data traffic. We make no changes to our earnings forecasts, NEUTRAL rating or DCF-based target price of S$2.63 (WACC 8.5%). M1 remains our top Singapore telco pick.
The news
M1 has launched its Long Term Evolution (LTE) service to enterprise customers which would operate on the 1800 MHz and 2600 MHz bands with initial theoretical download speeds of 75 Mbps and upload speeds of 37.5 Mbps. By end-2012, download speeds will be upgraded to 150 Mbps and upload speeds to 75 Mbps. The service will only be available to selected parts of the island within the financial district, including Marina Bay, Suntec, Shenton Way and others. Coverage will progressively be expanded to other areas and should be nationwide by 1Q12. The launch will only involve enterprise customers which will be able to access the service via USB modems on existing mobile broadband plans of S$59.40/month. An expanded range of devices including tablets and smartphones will be available later this year.
LTE is a mobile broadband standard widely regarded as a successor to 3G and is on the path to 4G. It is based on all-IP network and promises improvements in speed, network capacity, coverage, operating costs and user experience. The standard currently provides download peak rates of at least 100 Mbps with future developments potentially yielding speeds as fast as 300 Mbps while upload speeds should at least be 50 Mbps.
Comments
More of a soft launch. We view the announcement as more of a soft launch as it is only targeted at enterprise customers, LTE coverage is fairly limited and more devices will only be expected in the later part of the year (expected sometime in 3Q at the earliest). Nationwide coverage is only expected in 1Q12. We believe M1 is trying to drum up publicity ahead of a wider launch as it likes to be the first to launch services, having done so with HSDPA in Dec 06 and NGNBN in Sep 10.
Not much impact on revenue and costs. We do not expect major revenue contributions from the service as coverage and devices remain limited. Moreover, M1 has protected its ARPU at this stage by charging S$59.40/month, which is the equivalent pricing for its fastest mobile broadband plan of 21 Mbps. On the cost front, there is not expected to be a huge impact as take-up will not be that significant and cost per device is not too exorbitant.
Spectrum not an issue. LTE will consume the bulk of M1’s capex spending of S$100m this year, as guided in the past, although no exact quantum has been disclosed. A key prerequisite by IDA for the re-use of 1800 MHz and 2600 MHz is there should no degradation to the quality of the operators’ 2G services. This should not be a problem for M1 as it had purchased an additional 2×5 MHz of 1800 MHz in Mar 11 at a whopping cost of S$21.7m (54x the reserve price) and together with StarHub, has the most 1800 MHz spectrum. This should enable the operators to handle any upsurge in data traffic and any potential network congestion issues.
Valuation and recommendation
We make no adjustments to our earnings forecasts, DCF-based target price of S$2.63 (WACC: 8.5%) and NEUTRAL rating. M1 lacks catalysts though this is balanced by having the most upside from NGNBN and benefits from soaring inbound visitors. It also has the most scope for capital management. M1 remains our top pick in the Singapore telco sector.