SingTel - CIMB Research 2015-11-11: BPL status quo

SingTel - CIMB Research 2015-11-11: BPL status quo SINGTEL Z74.SI 

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: 
    1. BPL brand association/marketing and 
    2. 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.

FOONG Choong Chen CFA CIMB Securities | http://research.itradecimb.com/ 2015-11-11
CIMB Securities SGX Stock Analyst Report ADD Maintain ADD 4.30 Same 4.30