SingTel - BPL status quo

■ As expected, SingTel has successfully retained the BPL broadcasting rights for the Aug 2016-19 seasons.

■ BPL rights possibly secured on exclusive basis, similar to current situation. While cost may have further increased, the impact on net profit should be minimal.

Maintain Add with unchanged SOP-based target price of S$4.30. Yield: 4.5-5.0%.

SingTel retains BPL broadcasting rights for 2016-19 seasons
SingTel announced yesterday that it has retained the broadcasting rights to the Barclays Premier League (BPL) for the next three seasons from Aug 2016-19. This is the third time SingTel has managed to secure the BPL rights since it first snatch this away from StarHub for the Aug 2010-13 seasons.

Not a surprise given SingTel’s strong balance sheet
This does not come as a surprise given SingTel’s strong balance sheet vs its local peers. The BPL, which was used as the initial pull factor to build up the user base in the early-2010s, remains a key content on SingTel’s Pay TV platform even though additional popular content (e.g. Disney, Fox) has since been added over the past few years.

SingTel went exclusive on BPL again?
The press reported that the BPL rights were secured on an exclusive basis and would be subjected to the cross-carriage mandate, which is similar for the current Aug 2013-16 seasons. However, SingTel says it is still ironing out specifics of the contract and will have to seek clarification on this. Some benefits from exclusivity are: a) BPL brand association/marketing and b) BPL content for digital applications/mobile streaming.

Impact on net profit should be minimal
There is little indication of the price SingTel paid for the BPL rights, though we think it could possibly be higher than the rumoured S$410m paid for the 2013-16 seasons. Assuming the cost has risen by 50% and SingTel maintains its BPL subscription price, the full-year impact would be S$56m (net of tax) or 1.4% of our FY18F EBITDA. SingTel could partly allay this cost increase through further subscription price hikes.

Technical Analysis
Daily Chart
Maintain Add with SOP-based target price of S$4.30
SingTel trades at FY17F EV/OpFCF of 16.4x and offers decent FY16F-18F dividend yield of 4.5-5.1%. The share price has slumped 12.4% from its peak in mid-Apr on the back of general market weakness and now offers 15.6% total return (including 4.5% dividend yield). Potential catalysts include a rebound in regional currencies and earnings improvements at Optus. (Read Report)

Source : CIMB Research

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