Singapore Telcos

UOBKayhian on 5 sept 2013

M1 (M1 SP/BUY/S$3.20/Target: S$3.95)
StarHub (STH SP/BUY/S$4.14/Target: S$4.80)
SingTel (ST SP/HOLD/S$3.44/Target: S$3.52)

Singapore telcos have restructured the pricing of data usage to enhance their ability to monetise date usage:
a) Migration to tiered data plans. SingTel pioneered tiered data plans for 4G services when it introduced Flexi Lite, Flexi Value and Flexi Plus plans with data bundles of 2G, 3G and 4G respectively in Jun 12. M1 and StarHub subsequently launched similar tiered data plans in Sep 12. The previous overly generous data bundle of 12GB has been removed.

b) Increasing excess charges for data. SingTel will increase excess charges for data from S$5.35/GB to S$10.70/GB for customers recontracting from 16 September onwards. We expect StarHub to follow
suit in re-pricing excess charges higher from S$6.42/GB to S$8.56/GB starting Jan 14. M1 has not disclosed any pricing details but is likely to abide by industry trend in monetising data usage. Telcos are starting to benefit from migration to tiered data plans and increased usage of data. M1, StarHub and SingTel reported sequential increases in ARPU of 2%, 5.9% and 1.3% respectively for 2Q13. Re-iterate BUY for M1 and StarHub. We have increased M1’s target price by 10.3% and StarHub’s by 4.3%.