Local telco incumbents 'clearly have an edge' over new entrant at this juncture, says Maybank

Local telco incumbents 'clearly have an edge' over new entrant at this juncture, says Maybank

Michelle Zhu
07/02/19, 11:00 am

SINGAPORE (Feb 7): Maybank Kim Eng is keeping “neutral” on Singapore’s telco sector on the belief that incumbent telcos have an edge in terms of subscriber in retention amid a “proliferation of new MVNOs (mobile virtual network operators)” as well as new mobile network operator TPG Telecom.

This comes post the research house’s survey of 150 telcos subscribers, out of which 81% said they stuck to their providers for more than 24 months.

NetLink NBN Trust remains Maybank’s top “buy” pick with a target price of 93 cents, given its virtual monopoly of residential fibre connections.

The research house has a “buy” rating on StarHub with a target price of $2.21.

In a Thursday report, analyst Luis Hilado says the survey results supports his view that churn and potential 100% loss-of-revenue-risks appear limited for Singapore’s telco incumbents, even as the sector lacks immediate catalysts.

“Rather than actual churn risks, we believe the threat to the telcos continues to come from yield erosion e.g. intact prices but more data allocation with no lock-up contracts. We currently assume a -2% CAGR for incumbent wireless revenue for 2018E-21E, reflecting yield pressure and not churn-based wars,” says Hilado.

Noting that most survey respondents appear to value wireless data allocation and/or pricing, network quality and handset discounts the most, the analyst says he does not expect TPG Telecom to resort to aggressive handset subsidies.

As such, he believes telco incumbents “clearly have an edge” over TPG in the first two most-valued categories.

“The incumbents themselves are now directly in the fray and not just using their MVNO partners to participate in SIM-only, wireless-data-focused wars. Once TPG unveils its commercial launch plans and the market adjusts, there may be room for stability,” he adds.

As at 11am, shares in NetLink NBN Trust and StarHub are trading at 78 cents and $1.87, respectively.

Metro bets on decentralised office market with $45.6 mil investment in Tampines property

SINGAPORE (April 18): Metro Group has acquired 7 & 9 Tampines Grande, a premium Grade A office property in Singapore, through a 50:50 joint venture (JV) between its subsidiary Metrobilt Construction and an affiliate of SRIF GP. On its part, Metro will be investing about $45.6 million for its 50% capital commitment share. Through the newly-incorporated JV company, Ascend TGrande, both Metro and SRIF have agreed to purchase T-Grande Investment Holding from Golden Crest Holdings, a wholly-owned subsidiary of City Developments. T-Grande Investment Holding is the owner of T-Grande Prop....

Keppel Corp posts 40% drop in 1Q earnings to $203 mil on lower one-off gains

SINGAPORE (Apr 18): Keppel Corporation saw its earnings fall 39.9% to $202.9 million for the 1Q19 ended March, from $337.5 million a year ago. The decline was mainly attributable to the absence of a $289 million gain in 1Q18 arising from the en bloc sale of Keppel Cove in Zhongshan, China. In 1Q19, the group recorded gains of $174 million from the divestment of a 70% interest in Dong Nai Waterfront City, Vietnam and the re-measurement of previously held interests in M1 at acquisition date Consequently, other operating income was halved to $145.6 million in 1Q19, from $300.0 million a ....

UOI 1Q earnings more than double to $11.4 mil

SINGAPORE (Apr 18): United Overseas Insurance (UOI), the insurance arm of United Overseas Bank (UOB), reported 1Q19 earnings increased 153% to $11.4 million, compared to $4.5 million in 1Q18. Gross premium written saw a 2.5% increase to $27.9 million from $27.2 million a year ago, mainly due to an increase in fire and reinsurance classes of insurance. Underwriting profit was 16.1% higher at $5.9 million compared to $5.0 million last year, mainly due to a 29% y-o-y increase in net commission, as a result of higher reinsurance commission recoveries from reinsurers. During the quarter, t....