DMG & Partners Research, July 1
WHILE SingTel and Yoma have lost the battle for Myanmar's telco licences, NeraTel may score an indirect victory.
This is because our checks show that both of the Myanmar license winners - Telenor and Ooredoo - are NeraTel's existing customers. NeraTel is currently providing services to them in Indonesia and in Malaysia.
According to the terms of the contract, effective from September 2013, both Telenor and Ooredoo have nine months to commence operations, and need to cover 75 per cent of Myanmar with voice services and 50 per cent with data services within the next five years.
In order to maximise the 15-year licence benefits, Ooredoo has even outlined a more aggressive plan, spending US$15 billion to reach 90 per cent of Myanmar's population within two years.
In order to cover such a vast area in a short time frame, we expect these telco operators to soon open up project tenders to equipment and system integrating vendors as well as to use radio transmission technology in the process.
Given NeraTel's established track record and expertise in the field, we believe that the group has a high chance of winning the tenders. It has already been deploying payment terminals in the country and we expect them to formally set up a telco company in bidding for the contracts. Also, as mentioned in our previous report dated April 29, the recent Nera Malaysia acquisition will result in one-off profits of around S$7 million, of which S$5 million is in cash.
We believe that there is a high chance that the gain will be recorded in the upcoming Q2 results, thereby increasing the likelihood for the company to surprise the market with interim dividends.
As such, we adjust our FY13 profit estimates upwards.
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