Category: SingTel
SingTel – BT
SingTel lowers cost of fibre connectivity for businesses
THE promise of cheaper business connectivity he-ralded by the upcoming Next Generation Nationwide Broadband Network (Next Gen NBN) appears to be materialising even before the landmark digital highway is ready.
Singapore Telecommunications yesterday launched its cheapest fibre optic-based network service for businesses – dubbed Meg@POP eLite – which offers symmetrical data transmission speeds of up to 100 Mbps.
The latest addition to SingTel’s existing suite of secure fibre-based services, it is aimed at businesses that run heavy-duty networking applications such as cloud computing services and high-definition video conferencing.
‘In the market today, businesses typically pay about $500 per month for a 10 Mbps copper connection to their private office network,’ said Chan Yim Leng, SingTel’s vice-president of business products. The new service provides up to 10 times the speed for around the same price, she said.
Besides targeting businesses, SingTel is also eyeing service providers which can leverage on Meg@POP eLite to offer services such as Web hosting to other businesses.
Market watchers expect the Next Gen NBN to lead to lower business connectivity prices in Singapore, as it heralds a level playing field where ownership of the network is separate from services that tap on the network.
As a result, it is also expected that prices of existing business connectivity services will be falling in the months ahead.
The all-fibre Next Gen NBN is expected to reach 60 per cent coverage of all residential premises and commercial buildings by year-end, and achieve 95 per cent coverage by 2012.
SingTel – BT
SingTel’s Premier League update
SINGTEL yesterday released some details of its Barclays Premier League programming for next season but said that it was still in negotiations with various production houses for review and analysis shows.
A fans feedback programme, an analysis show and a preview show will be aired every week, with content produced in high-definition in Singapore studios by ‘respected’ hosts and pundits, SingTel said.
Selected fans will also get a chance every week to attend a football game in England and also be part of the mio TV crew in the stadiums there, with access to press facilities and interviews.
While SingTel has poached sports channel ESPN to its cable television platform from competitor StarHub, ESPN is ‘just one’ of the houses that SingTel has approached, Singapore CEO Allan Lew said yesterday. Negotiations are under way and will be concluded by May, he said.
All 380 matches of the football season will be broadcast, and there is an option for customers to receive live ‘streaming’ of matches through their mobile phones.
Mr Lew said that subscriptions to mio TV had increased 70 per cent since SingTel launched its sports subscription package last November. Updated subscription numbers will be released when SingTel reports its quarterly results next month.
Mr Lew said that the Infocomm Development Authority of Singapore was studying the possibility of allowing pay TV signals to be carried by co-axial cables within the home for home networking purposes.
SingTel caused a storm when it beat StarHub to the rights to broadcast the next three seasons of Barclays Premier League football in Singapore. Fans in Singapore complained of the inconvenience and cost of a different delivery platform.
StarHub yesterday said that it had secured exclusive rights to screen Brazilian league games in Singapore until 2011. Broadcast for the January to December season will begin this weekend.
SingTel – CIMB
Listing Optus?
IPO of vendor or new shares?
Maintain Underperform. Dow Jones has reported that SingTel plans to sell 25% of Optus in an IPO that could raise A$4bn, according to unnamed sources. The report also quotes another source saying that SingTel values Optus at A$14bn. This news does not surprise us as SingTel was earlier rumoured to be planning a listing of Optus. It is unclear if it plans to sell new or vendor shares. We would be positive if
SingTel sells down its stake as the funds raised could be distributed as dividends. But if Optus raises fresh equity, we would view this negatively, as we see little need for more capital. The A$14bn valuation appears steep against our valuation of A$9.3bn. We maintain UNDERPERFORM on SingTel with an unchanged sum-of-the-parts target price of S$3.30. We see potential de-rating catalysts from further negative news
from India, rising content costs in Singapore and a likely escalation of competition in Australia.
The news
Dow Jones has reported that SingTel plans to sell 25% of Optus in an IPO that could raise A$4bn, according to unnamed sources. The report also quoted another source saying that SingTel values Optus at A$14bn. “Although there is no firm timing yet and no banks have been mandated, you could see things rolling as early as the first half of this year.”
Comments
Doing a Hutch? This news does not surprise us. SingTel was earlier rumoured to be planning a listing of Optus. It is unclear if it plans to sell new shares of Optus or vendor shares. We would be positive if SingTel sells down its stake as the funds raised could be dished out as dividends. The A$4bn raised equates to S$0.33/share or 11% of SingTel’s share price. This would be reminiscent of Hutchison Telecom
International Ltd, which spun off its mature units in Hong Kong Macau by way of distribution in specie.
But if Optus raises fresh equity, we would view this negatively. We see little need for more capital by Optus, given the mature market in Australia and Optus’s already strong free cash flow of about A$600m p.a.
Steep valuations. The A$14bn valuation touted appears steep, at 16x and 15x CY10-11 P/Es and 6.1x and 5.9x EV/EBITDA vs. our valuation of A$9.3bn. This is especially so against a backdrop of rising competition from Virgin Hutchison Australia, which is aiming to the second-largest mobile operator.
Nonetheless, SingTel would benefit if this valuation can be achieved. The valuation implies a 5.6% CAGR equity return for SingTel for the last nine years, taking into account its acquisition price of US$9bn (S$15.6bn) in Sep 01, an estimated average A$700m p.a. in dividends to SingTel and the A$14bn (S$18bn) IPO valuation. The returns would be higher if the acquisition is leveraged.
Valuation and recommendation
We maintain our UNDERPERFORM rating on SingTel with an unchanged sum-of-theparts target price of S$3.30, on the back of this news. We see potential de-rating catalysts from further negative news from India, rising content costs in Singapore and a likely escalation of competition in Australia. Switch to M1 (M1 SP, Neutral, TP: S$2.07) for lower-risk, higher-dividend telco exposure in Singapore or Axiata (AXIATA
MK, Outperform, TP: RM3.86) for exposure to regional emerging telco markets.
SingTel – BT
Bharti gets nod from Bangladesh to buy Warid
It will purchase a 70% stake from owner Dhabi Group
A bid by Indian telecoms giant Bharti Airtel to purchase Bangladesh’s fourth largest mobile phone operator Warid has been approved, regulators said yesterday.
Abu Dhabi-based Dhabi Group, which fully owns Warid Telecom, last month sought approval from the Bangladesh Telecommunications Regulatory Commission (BTRC) for the sale of a 70 per cent stake in Warid.
‘The commission has given the go-ahead to transfer (Dhabi Group’s) Warid telecom shares to Bharti Airtel,’ the director general of BTRC, Ahsan Habib, told AFP yesterday.
The purchase makes Bharti the latest foreign company to make in-roads into the fast-growing Bangladesh mobile market.
‘The commission has also approved investment of US$300 million by Bharti Airtel for the expansion of their telecommunication network across the country,’ Mr Habib added.
Launched in May 2007, Warid had nearly three million subscribers – out of nearly 52 million overall – at the end of October 2009.
As the industry expands in Bangladesh, analysts predict that the number of mobile customers will pass 100 million by 2015, fuelled by a price war among the country’s six operators.
In 2004, Egyptian Orascom took over Sheba and Singapore’s state-owned SingTel bought a 45 per cent stake in Bangladesh Telecom in 2005.
Last year, Japan’s NTT DoCoMo paid US$350 million to buy a 30 per cent stake in operator Aktel, majority owned by Malaysia’s Axiata.
The move into Bangladesh by Bharti comes after its plan to ally with South Africa’s MTN to create an emerging market telecom giant collapsed in September when Pretoria said that it feared that MTN might lose its ‘national character’.
Analysts said that Bharti, which has more than 100 million subscribers in India, will need to expand abroad to increase revenues with earnings growth slowing in its home market, which has become crowded by new players. — AFP
TELCOs – BT
A tale of two halves for local telco sector
Operators come to life in second half after six-month hibernation
2009 has turned out to be a tale of two halves for Singapore’s telecommunications sector, with operators stirring to life in the second half after a six-month hiatus. And the action can only get more sizzling as the key players brace for heightened competition with the arrival of the new nationwide, ultra high-speed broadband network in 2010.
In the first six months of this year, Singapore Telecommunications, StarHub and MobileOne were mostly in hibernation, relying on a mix of tight cost controls and recurring subscriber revenues to tide them through the global downturn.
While many companies struggled, the three operators proved their mettle by delivering an encouraging set of first-half results in spite of the economic difficulties.
StarHub’s net profit rose 11 per cent during the period to $160.3 million, while M1’s net income fell marginally by 0.3 per cent to $78.9 million.
SingTel’s profit for its fiscal fourth quarter ended Mar 31 declined 17 per cent due to its overseas exposure. However, it rebounded strongly three months later with a 7.7 per cent rise in net income to $945 million for its first quarter ended June 30.
‘The biggest highlight was basically being able to grow the revenue from our Singapore business, our Ebitda (earnings before interest, tax, depreciation and amortisation) and free cash flow,’ said Allen Lew, CEO of SingTel Singapore.
While the telco front was starved of major competitive strides in the first half, one operator did ring in major changes to its management deck from the get go. In January, M1’s CEO of 12 years, Neil Montefiore, announced his resignation. Its long-serving chairman, Lim Chee Oon, also stepped down two months later.
M1’s chief financial officer Karen Kooi eventually took over the reins in April, becoming the second local telco CFO to be promoted to the top job after SingTel’s Chua Sock Koong. Teo Soon Hoe, Keppel Corp’s senior executive director and group finance director, took up the post of M1 chairman.
The first half also saw the start of another round of merger talks between SingTel’s Indian associate Bharti and South Africa’s MTN Group but regulatory hiccups caused the deal to be scuppered a second time.
But StarHub’s attempt at business diversification eventually succeeded as its subsidiary Nucleus Connect clinched the government’s OpCo (operating company) tender to operate the Next-Gen NBN (National Broadband Network), the country’s new fibre-optic broadband superhighway. ‘It is a milestone for us to win the bid to build and manage the OpCo for the Next-Gen NBN. This is the more exciting and innovative part of the Next-Gen NBN infrastructure,’ said StarHub spokeswoman Jeannie Ong.
Past the half-year mark, signs of economic recovery reignited the competitive flames among the three warring factions.
SingTel started the ball rolling by retaining its exclusive rights to sell the latest version of Apple’s coveted touch-screen handset – the iPhone 3GS – in July.
In the same month, StarHub announced that it had poached Mr Montefiore to succeed its outgoing chief Terry Clontz. Mr Clontz will retire at the end of this month.
M1, on its part, signalled its intention to branch into the broadband market by buying Internet service provider Qala for $14.9 million in September.
A month later, any uncertainty surrounding the change-of-guard at StarHub was made worse when SingTel managed to score the broadcast rights to the English Premier League (EPL) for its mio TV platform in October.
‘I have not seen so many people talk about mio TV until we won the EPL. The ability to bring mio TV from being a niche product to a must-have product is significant,’ SingTel’s Mr Lew said.
‘While we may not have the rights to air the EPL for the next three seasons, it is not game over for us. StarHub still has a wide array of content,’ responded StarHub’s Ms Ong.
While ‘robbed’ of the crown jewel of its cable programming, StarHub – along with M1 – finally managed to land the star of SingTel’s handset portfolio, the iPhone 3GS. The device, which went on sale at StarHub and M1 shops earlier this month, sparked off one of the fiercest mobile skirmishes in local history. StarHub upped the data bundle for its basic iPhone plan tenfold in a day in response to M1’s generous subscription packages. SingTel reacted the next day by doing the same.
Such tit-for-tat battles will likely continue into 2010 when the Next-Gen NBN starts to come online from the end of the first quarter, market watchers say.
‘Starting from a very low base, we believe that M1 is likely to benefit the most from this as it would be able to offer fixed line broadband services on an equal footing. It will also be able to make its maiden foray into the more lucrative corporate broadband arena with Qala,’ said OCBC research analyst Carey Wong.
StarHub, on the other hand, will finally get a chance to provide Internet connectivity to corporate customers, while SingTel can now replace its aging copper cables with high-speed fibre-optic pipes, he said.