5G licences to boost telcos in Q1

StarHub and M1 are expected to jointly bid for a nationwide 5G licence in January.

As telcos bid for nationwide 5G licences, their share prices are expected to get a boost in Q1 2020, according to DBS Equity Research.

StarHub and M1 are expected to jointly bid for a nationwide 5G licence in late January 2020, whilst Singtel is seen to proceed with its bid independently. Licences for 5G are sighted to be awarded in mid 2020.

Amongst telecoms in Singapore, DBS reckons Netlink NBN (NLT) to be a top performer. Due to a 97% penetration of residential fibre in the country, NLT offers a 5% EBITDA CAGR over FY2020 to FY2022.

Singtel is also seen to have good performance with 5% yield and 8% earnings CAGR over FY2020 to FY2022 after three years of decline in earnings due to its losses in Bharti, India.

Meanwhile, StarHub’s sighted joint bid by January 2020 is considered to be a share price catalyst. The company also records a good 6% dividend yield, and whilst StarHub’s operating metrics remain weak, the company’s share price may further benefit from significant capex reductions over FY2020 to FY2022.