UOBKayhian on 1 Jul 2014
Regulatory intervention could reinvigorate MVNOs. The Infocomm Development Authority (iDA) has initiated industry consultation on enhancing competition and service innovation, including measures to encourage the hosting of mobile virtual network operators (MVNOs) by mobile network operators (MNOs). It could provide incentives for voluntary hosting of MVNOs, such as discounts or rebates for regulatory fees. The iDA could also adopt a more heavy-handed approach of implementing wholesale price regulations or setting a minimum allocation of network capacity for
MVNOs.
Maintain OVERWEIGHT. We see growth and innovation within the mobile space. These include wearable gadgets, such as Google Glass and Samsung Galaxy Gear. In future, all electronic gadgets would be linked by machine-to-machine connections via "Internet of Things" (IOT). The low levels of gearing for all three telcos also provide potential upside from capital management over the longer term.
On average, the three telcos are trading at a healthy spread of 2.65% above 10-year Singapore government bonds, in line with the long-term mean of 2.69%. SingTel’s yield spread is 2.03%, above mean of 0.88%. Conversely, StarHub’s yield spread is 2.34%, below mean of 3.61%. Our top-picks are M1 and SingTel.
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