■ Annual Investor Day spotlighted strong data-growth & digital
initiatives across the group.
■ Optus intends to go head-to-head with Telstra. Will involve
higher capex in Australia.
■ Maintain HOLD on lack of catalysts, especially as dividends
could be capped by higher capex. SOTP TP still SGD4.50.
Two things stood out from Singtel’s annual Investor Day.
entire group is aggressively pursuing data growth.
Two, the group
has taken to heart the digital initiatives of Group Digital Life and
has launched products that leverage Singtel’s investments.
Singapore. Singtel intends to develop its data business further by
drawing more home and mobile customers towards fibre and tiered
data plans. At 71% and 61% penetration respectively, it believes
there is room for growth. Management believes the entry of a new
player exempted from strict rollout criteria should not be taken as
a given. All Singtel asks for is a level-playing field.
Australia. Optus intends to wrest market share from Telstra, by
matching the incumbent’s leading network quality. As such, higher
capex of AUD1.7b this year could be sustained over the next few
years, potentially capping Singtel’s ability to raise payouts.
However, the higher capex should pay off if Optus succeeds.
Associates. Going into FY3/16, all associates expect to retain their
data focus. Data growth was heavily emphasised in all their
presentations. Globe & Telkomsel have also introduced digital
services such as mobile video and e-payment that leverage
Singtel’s investments and partnerships.
What’s Our View
Maintain HOLD along with our SOTP-based TP of SGD4.50
outlook may be muted but downside should be protected
by yields of 4.5%. However, we caution against expecting overgenerous
dividends as heightened capex could cap payouts. (Read Report)
Source : Maybank Kim Eng Research
Labels: Singtel, Telco