Singapore Telcos - Maybank Kim Eng 2019-10-17: Latest 5G Iteration ~ More Cooks?

Singapore Telcos - Maybank Kim Eng Research | SGinvestors.io SINGTEL (SGX:Z74) STARHUB LTD (SGX:CC3) NETLINK NBN TRUST (SGX:CJLU)

Singapore Telcos - Latest 5G Iteration ~ More Cooks?


Looking tougher…




…unless

  • With potential 4-way competition in industrial areas, higher investment risks will be factored in by would-be MNO bidders. It may also dampen interest in the localised licenses. That may lead to just 2-3, not four, players participating in such areas.
  • However, given that the fourth MNO license taken up in 2016 when there was over 150% SIM penetration surprised the market, we cannot rule out multiplayer risk. Meanwhile, nationwide coverage of 50% by end-2022 could theoretically be ideal if the two nationwide licensees can cooperate on coverage to:
    1. avoid duplication; and
    2. enable local 5G roaming to bring the nation closer to 100% coverage faster than two parties targeting the same areas.


Whether consumer or investor, a 5G case does not seem palatable today

  • In our recent wireless survey, 75% of our respondents were not willing to pay higher monthly bills for 5G vs 4G. See report: Singapore Telcos - Our Survey Says Loyalty Remains.
  • 5G rollout would still be needed for operators to remain competitive locally and for Singapore globally but the appetite of investors for waiting out returns on 5G capex creates an overhang in the sector. This is despite an already-significant de-rating due to 4G price competition.
  • Minimising costs and speeding up national rollout through cooperation may be the win-win the consumer and financial markets would want.


If it’s basic service, then regulate it as such?

  • In our view, the consumer’s increasing treatment of wireless data as a basic service - similar to water, transport and power - begs the question of whether a regulated-returns framework should be the long-term path. This is already the thinking behind the structure for residential fibre broadband that created NetLink Trust.





Luis Hilado Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-10-17
SGX Stock Analyst Report HOLD MAINTAIN HOLD 3.440 SAME 3.440
BUY MAINTAIN BUY 2.000 SAME 2.000
BUY MAINTAIN BUY 1.030 SAME 1.030



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