Singapore Telcos M1 SingTel StarHub - Maybank Kim Eng 2017-09-19: iPhone Handset Plans – Early Adopter Rates

Singapore Telcos - Maybank Kim Eng 2017-09-19: IPhone Handset Plans – Early Adopter Rates M1 vs Singtel vs Starhub iPhone X Price Plan iPhone 8 Price Plan M1 LIMITED B2F.SI SINGTEL Z74.SI STARHUB LTD CC3.SI

Singapore Telcos - IPhone Handset Plans – Early Adopter Rates


Holding the line for now 

  • With the iPhone 8 and iPhone X models set to be released, the three Singapore incumbent telcos have unveiled subsidized handset pricing plans. The iPhone 8 plans carry similar handset pricing as the prelaunch iPhone 7 plans while the iPhone X plans have a larger discount (SGD40 to SGD144 per unit). 
  • Combined with recent higher data allocation and unlimited data plans that carry higher ARPU commitments for SingTel (ST SP, HOLD, Target Price SGD3.83) and StarHub (STH SP, SELL, Target Price SGD2.17), the two telcos are not yet being very aggressive in retention efforts. This is logical, in our view, given that early adopter demand may constrict available supply in the near term. 
  • M1 (M1 SP, SELL, Target Price SGD1.59) has yet to release iPhone X pricing plans but its SIM only data plans are currently the most aggressive among the incumbents.



iPhone 8 and iPhone X plans (with 2 years contract)

iPhone 8 64GB iPhone 8 256GB iPhone X 64GB iPhone X 256GB
(SGD / unit) (SGD / unit) (SGD / unit) (SGD / unit)
Retail price @ Singapore Apple store 1,148 1,388 1,648 1,888
SingTel
SGD43 / mo plan (SGD516 / yr) 658 878 1,108 1,338
Discount (SGD) 490 510 540 550
Discount -42.7% -36.7% -32.8% -29.1%
SGD68.90 / mo plan (SGD827 / yr) 428 648 878 1,098
Discount (SGD) 720 740 770 790
Discount -62.7% -53.3% -46.7% -41.8%
SGD95.90 / mo plan (SGD1,151 / yr) 178 408 638 858
Discount (SGD) 970 980 1,010 1,030
Discount -84.5% -70.6% -61.3% -54.6%
SGD239.90 /mo plan (SGD2,879 / yr) 0 0 0 0
Discount (SGD) 1,148 1,388 1,648 1,888
Discount -100.0% -100.0% -100.0% -100.0%
StarHub
SGD48 / mo plan (SGD576 / yr) 606 831 1,061 1,285
Discount (SGD) 542 557 587 603
Discount -47.2% -40.1% -35.6% -31.9%
SGD68 / mo plan (SGD816 / yr) 424 648 878 1,103
Discount (SGD) 724 740 770 785
Discount -63.1% -53.3% -46.7% -41.6%
SGD108 / mo plan (SGD1,296 / yr) 85 309 539 764
Discount (SGD) 1,063 1,079 1,109 1,124
Discount -92.6% -77.7% -67.3% -59.5%
SGD238 / mo plan (SGD2,856 /yr) 0 126 356 581
Discount (SGD) 1,148 1,262 1,292 1,307
Discount -100.0% -90.9% -78.4% -69.2%
M1
SGD42 / mo plan (SGD504 / yr) 665 885 na na
Discount (SGD) 483 503 na na
Discount -42.1% -36.2% na na
SGD62 / mo plan (SGD744 / yr) 465 690 na na
Discount (SGD) 683 698 na na
Discount -59.5% -50.3% na na
SGD102 / mo plan (SGD1,224 / yr) 140 365 na na
Discount (SGD) 1,008 1,023 na na
Discount -87.8% -73.7% na na
SGD228 / mo plan (SGD2,736 / yr) 0 0 na na
Discount (SGD) 1,148 1,388 na na
Discount -100.0% -100.0% na na
Source: Company data, Maybank Kim Eng



Pressure will mount in FY18 

  • After the initial wave of early adopter demand fades and as TPG Telecom’s (TPM AU, Not Rated) full mobility service or MyRepublic’s (Not Listed) mobile virtual network operator (MVNO) launches draw closer (circa mid-June 2018), we believe the pressure to re-contract subscribers will increase and so will subsidies. 
  • Also, what we cannot see from published rates are the offers that will ultimately come to corporate individual schemes (CIS) where the deals are sweetened but are still subject to the maximum two-year retail contract limit.


Dreaming of a bright Christmas? 

  • For our forecasts we have assumed that hefty subsidies start making their mark in 4Q17 with holiday spend usually coinciding with contract renewals. If iPhone demand is such that a supply bottleneck keeps subsidies per unit at bay this would be an upside risk to our near-term forecasts. 
  • However, the medium-term prospects of accelerating the re-contracting process going into FY18 remain, in our view.


NEGATIVE view maintained 

  • The initial salvo of iPhone subsidy plans does not change our outlook for the Singapore telco sector going into a more competitive situation in FY18E and onwards. 
  • With 17% downside to our DCF-based TP of SGD2.17 StarHub remains our least preferred pick followed by M1’s 11% downside to DCF-based TP of SGD1.59.







Luis Hilado Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-09-19
Maybank Kim Eng SGX Stock Analyst Report SELL Maintain SELL 1.590 Same 1.590
HOLD Maintain HOLD 3.830 Same 3.830
SELL Maintain SELL 2.170 Same 2.170



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