Telecommunications - RHB Invest 2017-07-07: MyRepublic Checks Back In

Telecommunications - RHB Invest 2017-07-07: MyRepublic Checks Back In Singapore Telco MyRepublic M1 LIMITED B2F.SI SINGTEL Z74.SI STARHUB LTD CC3.SI

Telecommunications - MyRepublic Checks Back In

  • MyRepublic (MR) has announced its plans to roll out a mobile service later this year via the MVNO route. We think the intrepid fibre broadband operator could be reviving its mobile ambitions through StarHub (STH SP, NEUTRAL, TP: SGD2.70)
  • A StarHub-MR “partnership” could look to potentially minimise the direct threat from newcomer, TPG, which may be looking to bundle a fixed broadband product with a mobile offering when its services are commercialised in 2018. 
  • We expect MR to initially tap the low hanging fruits or its current base of c.70,000 fibre broadband customers. 
  • We maintain NEUTRAL sector weighting, with Singtel as our preferred pick. This is premised on its lower exposure to the Singapore market and potential for special dividends with the impending listing of NetLink Trust (NLT).



Taking the mobile virtual network operator (MVNO) route. 

  • At a media briefing, MyRepublic (MR) said it has finalised a wholesale pact with “one of the incumbent telcos” with an announcement to be made by the telco in “a month to 45 days”. 
  • Without giving details, MR highlighted that its mobile service could be launched as early as October with “generous mobile data”. 
  • Separately, a M1 (M1 SP, NEUTRAL, TP: SGD2.05) spokesperson said, in response to media queries, that “ it is not in discussion with MR on any MVNO offer”.


Hubbing with the green brand? 

  • We think the undisclosed telco could be StarHub as: 
    1. Management had earlier not ruled out collaborating with MVNOs; 
    2. The founding members of MR are former StarHub employees; 
    3. A StarHub-MR partnership could look to potentially minimise the direct threat from TPG Telecom (TPG) which may be looking to bundle a fixed broadband product with a mobile offering when its services are commercialised in 2018.
  • Our checks with industry sources revealed that StarHub may also be looking to seal a wholesale agreement focusing on the migrant segment in the coming months. This further supports the telco’s focus on growing its MVNO business.


MR adds to the spectre of competition and uncertainties ahead of TPG’s entry but could be a blessing in disguise. 

  • We believe the entry of MR as a MVNO would exacerbate the competitive headwinds in the market ahead of TPG’s rollout. 
  • Prior to submitting its bid for the fourth mobile license (awarded to TPG last December), MR had promised to bring back the high data bundles in the market. It is looking at no more than a 5-6% market share and could potentially break even with a 1.5% market share with no network baggage. This compares with TPG’s earlier target to be EBITDA-positive with a 5-6% market share. 
  • We expect MR to initially tap the low hanging fruits or its current base of c.70,000 fibre broadband customers. MR’s entry into the mobile business could serve to “defect” competition from TPG on the incumbent mobile network operators (MNO) as MR could pose more of a threat to TPG, in our view.


Not keen on M1. 

  • With the MVNO option, MR has denied talks that it is keen to acquire M1. We think this should put to rest market speculation that MR may be submitting a bid for M1 as part of a consortium (see our 2 Jun report, M1 Ltd : M1 Meets MyRepublic?).


Maintain NEUTRAL sector weighting. 

  • We have NEUTRAL calls on all three telcos, with Singtel as our preferred pick. This is premised on its lower exposure to the Singapore market and potential for special dividends with the impending listing of Netlink NBN Trust (NLT) (see our report dated 30 Jun, SG Research: Singtel - Unlocking The Trust). 
  • We expect concerns over the entry of a fourth MNO in TPG, structural pressure on roaming and usage revenues and potential downside risk on dividends to continue weighing on overall sector sentiment.







Singapore Research RHB Invest | http://www.rhbinvest.com.sg/ 2017-07-07
RHB Invest SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 2.050 Same 2.050
NEUTRAL Maintain NEUTRAL 3.900 Same 3.900
NEUTRAL Maintain NEUTRAL 2.700 Same 2.700



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