- Following the recent telco consolidation announcement in Singapore, we upgrade our sector view to POSITIVE and raise StarHub to BUY. We raise our Singtel's target price by 11% to S$4.75 and retain BUY.
Singtel & StarHub emerge as key consolidation beneficiaries.
- - Read this at SGinvestors.io -
- With ~75% of mergedco revenues contributed by M1, we see limited differentiation in its mobile revenue composition versus Singtel/StarHub, while integration risks and higher leverage remain key overhangs. But we believe competitive rationalization will prevail, supporting ARPU recovery from depressed levels relative to developed market Asia and driving sector re-rating potential.
Global precedents, SG ARPU signal competition uplift.
- - Read this at SGinvestors.io -
- Singapore is among the most competitively disrupted markets—ARPUs are down 36–41% since 2017 and 15-40% below developed market Asia peers, driven by Simba’s entry, MVNOs, SIM-only & flanker brands. We see scope for ARPU recovery as consolidation restores pricing discipline, though integration risks may weigh on the merged entity.
Mergedco: Legacy drag, leverage, limited synergies.
- Read more at SGinvestors.io.
