Here are 3 factors to boost SingTel revenues

Macquarie forecasts 4% revenue growth for FY12-15.

Macquarie reiterates its Outperform recommendation on SingTel with an increased price target of S$3.75 (TSR of 13%) following adjustments to its estimates for Bharti and Optus. 

Macquarie adds, improving competitive and regulatory environments in India are paving the way for tariff upside, while increasing scale in Africa is driving margin expansion – both positive for profitability and cashflows.

Here are 3 factors that will drive Singtel’s revenues according to Macquarie:

1) Bharti stepping up. We expect the improved pricing environment in India and improved scale in Africa to drive a 24% FY12-15 EPS CAGR at Bharti, even after incorporating c.US$3bn in regulatory costs in India.

Discounting in the Indian mobile market has already begun to ease and Macquarie’s Indian telecoms analyst, Abhishek Singhal, expects the first round of major tariff hikes in 1H13 – supporting our assumption of a 3-4% pa ARPM increase.

2) Australia – base built, ready for uptick. While the remainder of FY13 will be challenging, we expect cost management initiatives at Optus in recent quarters, a debottlenecking of its network and a more stable pricing environment to pave the way for margin and EBITDA (MQ est EBITDA +12% between FY13-FY15) expansion in FY14-15E.

It is still unclear what strategy Optus will adopt for the upcoming digital dividend auctions, but we note this may lead to a $1bn+ investment in spectrum.

3) Singapore data building. New tiered data pricing plans in Singapore are clearly providing support to data revenues and we believe will be a key
contributor to our 4% FY12-15E revenue CAGR estimates.

Additionally, a recent follow-up visit to SingTel’s Business Solutions Centre shows no abatement in SingTel’s development of new products and services for SMEs, which we believe will not only defend but support longer term growth for its data & internet revenues (MQ est FY12-15 CAGR of 5%).