Both M1 and StarHub put in pretty decent showing in their 4QCY results recently, mostly meeting our forecasts, although SingTel slightly disappointed due to its volatile Associates contribution. Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by continued customer additions and increasing mobile data usage. But with more smartphone users likely to use data-based means to communicate, we expect EBITDA margins to remain flat or even trend slightly lower. Nevertheless, thanks to their strong cashflow-generative businesses, the telcos have kept their dividend payout guidance, thus keeping their yields attractive. The telco shares have largely underperformed the broader market and were mostly flat YTD, whereas the STI has surged some 12.6%. But with markets likely to remain volatile, we believe that the telcos’ defensive earnings and attractive yields offer a safe harbour for the less risk-adverse investors. Maintain OVERWEIGHT.
Decent 4CY11 showing from M1, StarHub
Both M1 and StarHub put in pretty decent showing in their 4QCY results recently, mostly meeting our forecasts, although SingTel slightly disappointed due to its volatile Associates contribution. StarHub declared a quarterly dividend of S$0.05/share, while M1 declared a final dividend of S$0.079/share.
Review of Singapore mobile operations
For the post-paid mobile market, there was no change to status quo – SingTel continues to dominate with a ~47% share, followed by StarHub with ~28% and M1 ~26%. Overall, the post-paid subscriber base here grew by some 62k QoQ to 4029k in the quarter, with the bulk coming from SingTel (+44k). And due to limited availability of handsets during the iPhone 4S launch, we note that all the three telcos saw increased monthly churn, with the highest over at M1 (1.4%). Both SingTel and StarHub recorded modest improvements in monthly ARPUs while M1 saw a slight decline. Meanwhile, comments from all the three telcos suggest that a revamp of the generous data package currently for smartphones is likely when they launch LTE later this year.
Stable 2012 outlook
Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by continued customer additions and increasing mobile data usage. But with more smartphone users likely to use data-based means to communicate, we expect EBITDA margins to remain flat or even trend slightly lower. Nevertheless, thanks to their strong cashflow-generative businesses, the telcos have kept their dividend payout guidance, thus keeping their yields attractive.
Maintain OVERWEIGHT
The telco shares have largely underperformed the broader market and were mostly flat YTD, whereas the STI has surged some 12.6%. But with markets likely to remain volatile, we believe that the telcos’ defensive earnings and attractive yields offer a safe harbour for the less risk-adverse investors. Maintain OVERWEIGHT.
Both M1 and StarHub put in pretty decent showing in their 4QCY results recently, mostly meeting our forecasts, although SingTel slightly disappointed due to its volatile Associates contribution. StarHub declared a quarterly dividend of S$0.05/share, while M1 declared a final dividend of S$0.079/share.
Review of Singapore mobile operations
For the post-paid mobile market, there was no change to status quo – SingTel continues to dominate with a ~47% share, followed by StarHub with ~28% and M1 ~26%. Overall, the post-paid subscriber base here grew by some 62k QoQ to 4029k in the quarter, with the bulk coming from SingTel (+44k). And due to limited availability of handsets during the iPhone 4S launch, we note that all the three telcos saw increased monthly churn, with the highest over at M1 (1.4%). Both SingTel and StarHub recorded modest improvements in monthly ARPUs while M1 saw a slight decline. Meanwhile, comments from all the three telcos suggest that a revamp of the generous data package currently for smartphones is likely when they launch LTE later this year.
Stable 2012 outlook
Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by continued customer additions and increasing mobile data usage. But with more smartphone users likely to use data-based means to communicate, we expect EBITDA margins to remain flat or even trend slightly lower. Nevertheless, thanks to their strong cashflow-generative businesses, the telcos have kept their dividend payout guidance, thus keeping their yields attractive.
Maintain OVERWEIGHT
The telco shares have largely underperformed the broader market and were mostly flat YTD, whereas the STI has surged some 12.6%. But with markets likely to remain volatile, we believe that the telcos’ defensive earnings and attractive yields offer a safe harbour for the less risk-adverse investors. Maintain OVERWEIGHT.
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