UOBKayhian on 10 June 2015
U-turn from SMRT. SMRT Corporation has announced its decision not to proceed to
exercise its option to subscribe for shares in ConsisTel’s subsidiary OMGTEL, who is
bidding to be the fourth mobile operator in Singapore. SMRT has reviewed its capital
allocation priorities and decided not to make the passive investment. Management will
continue to focus on its core business of rail engineering. The about-turn from SMRT
highlights potential hiccups that MyRepublic and ConsisTel could encounter when
raising funds in preparation for the upcoming spectrum auction.
Not out of the woods. We believe the government intends to facilitate the entry of a
fourth mobile operator. A new entrant would spur competition in the mobile market and
consumers would benefit through more attractive pricing and innovative services. IDA
has yet to release its assessment of the submissions to its original industry consultation.
It has also not announced the framework for the upcoming spectrum auction, including
qualifying criteria for new entrants.
Maintain MARKET WEIGHT. We have to keep a close watch as events unfold. SingTel
remains a safer bet and we are no longer bearish on M1.
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