Singapore telcos' data monetization efforts bearing fruit

Investors are sitting up and taking notice.

According to OSK-DMG, while the sector’s prospective P/E valuations - at +1-2 SD above the 5-year mean - are not cheap, they reflect four positive things about the telcos: its strong capital management potential, defensive earnings, sustainable dividend yields of 4-5%, and superior balance sheets.

The research firm also noted how the FT Telecoms Index (FTTTC) has continued to outperform the STI despite rising bond yields, citing that investors have found "comfort" in the sector’s fundamentals.

But OSK-DMG said 2 overall risks cloud the sector, namely a sharp deterioration in the country’s macroeconomic environment, and a stronger or weaker than expected industry EBITDA.

Among the three Singapore telcos though, M1 was favoured by OSK-DMG as a stock pick because "it is executing well on its data aspirations and has the lowest competitive risks."