■ 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.
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