Comparison of the 3 Telco

M1 Business Review

Service Revenue 70%

• Mobile Telecommunication Services 78%
• International Call Services 16%
• Fixed Services 6%

Handsets Revenue 30%

Net Profit for FY2011 is $164.1M. It grew 4.5% as compared to FY2010.

Analysis
Concentrate on basic telco business and does not have revenue coming from the Pay-TV Sector.

Starhub Business Review

Service Revenue 94.1%

• Mobile  52.7%
• Pay TV 16.3%
• Broadband 10.5%
• Fixed Network Services 14.6%

Sale of Equipments 6.1%

Net Profit for FY2011 is $315.5M. It grew by 19.9% as compared to FY2010.

News and Analysis
According to OCBC research on Starhub, the rights for UEFA Euro 2012 cost more than double as compared to 2008 due to higher content costs. It will also be the first time there will be a cross-carriage mandate on the UEFA 2012 to be broadcasted in both Singtel and Starhub TV box. The report also stated that Singtel had about 353k Mio-TV customers in which 50% of it owns a starhub TV-Box as well.

Singtel Business Review

Net Profit for 3Q2011 is about $2.7B. 14.6% lesser than 3Q2010.

Singtel purchased about $2.6B worth of bonds from Singapore, US, Hong Kong and Japan.
Singtel also have disputes in their Indonesia Subsidary and India Subsidary.

Singtel stakes

• Bharti
• Telkomsel
• Globe
• AIS
• Others

Analysis
Singtel own Singtel Group Treasury Pte Ltd (SGT) notes of about $850M. Generally, Singtel is generating profits in the $1B region. On 2 March 12, SGT issued US$700M worth of notes and was more than 4 times oversubscribed by investors. Singtel’s good financial position were also determined by Moody’s with an Aa2 rating and A+ by Standard and Poor’s.

Summary
M1 lacks a Pay TV sector which is visible in Starhub and Singtel. However, M1 focus more on basic telco business whereas Singtel ambitiously targets international growth which in turn generate a substantial amount of risk in its business. Starhub’s business is somewhat similar to M1 but faces costs challenges in its Pay TV sector and maintaining its high dividend payout of $0.20 per share.

M1 - Safe and substantial growth
Dividend Yield 5%
Target price $2.4

Starhub - Good growth, high dividend payout
Dividend Yield 7%
Target price $2.85

Singtel - Good growth but may not be favorable to investors
Dividend Yield 4%
Target price $3




Published on 1 April  2012
Edited on 3 April 2012