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SINGAPORE (July 7): RHB Research is keeping its “neutral” rating on Singapore’s telecommunications sector, even as MyRepublic on Thursday announced it is seeking to become a mobile virtual network operator (MVNO) in Singapore.
MyRepublic CEO Malcolm Rodrigues at a press conference on Thursday said it does not intend to acquire M1 after its failed bid to become Singapore’s fourth telco operator.
Instead, the fibre broadband services provider says it will buy mobile bandwidth wholesale from one of the republic’s three incumbent telcos to become a MVNO.
RHB says in a report on Friday that it believes the undisclosed telco could be StarHub.
“A StarHub-MyRepublic ‘partnership’ could look to potentially minimise the direct threat from newcomer TPG,” says RHB’s Singapore research team.
“MyRepublic’s entry into the mobile business could serve to ‘defect’ competition from TPG on the incumbent mobile network operators (MNO) as MyRepublic could pose more of a threat to TPG,” it adds.
RHB opines that overall sector sentiment will continue to be weighed down by concerns over the entry of TPG as the fourth MNO, structural pressure on roaming and usage revenues, as well as potential downside risk on dividends.
As such, RHB is keeping its “neutral” calls on Singtel, M1, and StarHub.
Singtel remains its preferred pick, on the back of its “lower exposure to the Singapore market and potential for special dividends with the impending listing of Netlink NBN Trust (NLT).”
RHB has a target price of $3.90 on Singtel.
As at 4.58pm, shares of Singtel are trading 1 cent lower at $3.87.