Singtel to stay unfazed as new telco comes

Only 26% of its earnings are from Singapore.

Singapore telco Goliath Singtel should not be worried when the new group successfuly penetrates the sector as only a quarter of its earnings are from the city-state.

According to OCBC Investment, the new telco has only but a little impact on Singtel.

"Given the competitive mobile business environment, a fourth telco entry will likely exacerbate the pressures on mobile ARPU in Singapore. As a result, we forecast -2.0% compound annual growth rate for Singtel’s post-paid average revenue per user over a 5-year period to FY21," OCBC said.

But compared to the other two incumbents, M1 and StarHub, the said impact is much smaller.

"We also expect Singtel to lose some market share to the 4th Telco, and project Singtel to register -0.50% CAGR for the number of its post-paid subscribers over the same period. On a group level, we do not expect a material impact on its bottom line over the five-year period," OCBC said.

More so, the firm stressed that only around 26% of Singtel Group EBITDA and share of Associates’ earnings was derived from Singapore. And out of that 26%, around 32% is from the consumer segment in Singapore, which includes its pay TV and broadband businesses.

"Hence, we do not think losing 2-3% revenue share over the next five years will materially affect its dividend payout," OCBC argued.