SingTel - Maybank Research 2022-03-16: Gaining Traction In 5G Deployment

SINGTEL (SGX:Z74) | SGinvestors.io SINGTEL (SGX:Z74)

SingTel - Gaining Traction In 5G Deployment

Regional 5G standalone (SA) roll-out on track

  • Despite setbacks, sales of SingTel (SGX:Z74)’s 5G-equipped phones are as strong as pre-pandemic levels. Regionally, Telkomsel and Airtel have launched commercial 5G services and this should further spark the development of new 5G applications for consumers and enterprises in emerging markets.
  • We expect an increasingly competitive landscape as incumbents focus on monetising 5G services and increasing capex for 5G implementation.

Encouraging take-rate for 5G bundle services

  • With more than 1,000 5G SA sites across Singapore, SingTel is poised to meet the media authority’s (IMDA) target of 50% population coverage by end-22. Increasing 5G adoption via bundled packages has led to ARPU uplift (+0.3% y-o-y) and helped address dilution from 4G SIM-only plans.
  • In Singapore’s recent budget S$200m was earmarked to build digital capabilities for business in coming years. We believe SingTel is well-placed to capitalise on this through its lucrative enterprise business by offering assistance in the development of solutions for a wide range of uses. This initiative, however, will take time to bear fruit.

Strong competition in Australia

  • Telstra’s recent partnership with TPG Telecom to increase 5G predict constant dividend at 40-50% of net profit (dividend yield at 4.2%- 5.5%) from FY22E to FY25E.
  • Optus has allowed Telstra to regain dominance in the Australia Telco space and would need a game-changer in this competitive market.

Roadmap ahead

Kelvin Tan Maybank Research | https://www.maybank-ke.com.sg/ 2022-03-16
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