Monday, 31 August 2015

Singapore Telecommunications

UOBKayhian on 27 Aug 2015

FY15F PE (x): 16.5
FY16F PE (x): 15.3

Differentiating with data sharing targeted at families. Optus’ new My Plan Plus allows families to pool separate mobile plans under one bill to share the combined data allowance, and this plan was launched in Apr 15. Typically, 68% of customers use less than 50% of their monthly allowance. Demand for data is asymmetric. Those aged 18- 20 use 2.7 times more data compared with those above 45 years old. Thus, many parents would find My Plan Plus attractive as they can share their unused data with their children. Contribution from Optus hampered by weak Australian dollar. The Australia Consumer business registered growth of 12.8% yoy for operating revenue and 8% yoy for EBITDA in 1QFY16. Unfortunately, contribution from Optus was affected by the 10.6% yoy depreciation of the Australian dollar against the Singapore dollar. Our target price is S$4.72 based on DCF (required rate of return: 5.45%, terminal growth: 1.0%).

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