The 3 largest telecommunications service providers on SGX – Singtel, NetLink NBN Trust and StarHub – have a combined market cap of about S$55 billion.
Over a 12M period, the 3 telcos have averaged a total return of 14.5%. In the YTD and over calendar year 2019, the trio has averaged total returns of 1.4% and 13.0% respectively.
Industry regulator IMDA said last month it received 3 bids for 5G licences in Singapore, with Singtel Mobile and Australia’s TPG Telecom submitting one bid each, and M1 and StarHub submitting a joint bid. The regulator expects to award the spectrum by mid-2020.
The 3 largest telecommunications service providers on SGX – SingTel, NetLink NBN Trust and StarHub – have a combined market capitalisation of about S$55 billion.
Singapore’s smallest telco – M1 – delisted in March 2019, after local conglomerate Keppel Corp and media company Singapore Press Holdings jointly bought out Malaysian telecoms provider Axiata Group’s 28.7% stake in M1.
Over the past 12 months, the 3 telcos have averaged a total return of 14.5%. In the year-to-date and over calendar year 2019, the trio averaged total returns of 1.4% and 13.0% respectively.
The table below details the three largest telco plays on SGX, sorted by market cap.
| Name | SGX Code |
Market Cap S$m |
Total Return YTD % |
Total Retur n 2019 % |
Total Return 1 Yr % |
2020 YTD Avg Daily Turnover (S$) |
|---|---|---|---|---|---|---|
| Singtel | Z74 | 48,170 | -11.3 | 21.2 | 5.4 | 91,885,196 |
| NetLink NBN Trust | CJLU | 3,936 | 6.9 | 30.5 | 33.4 | 9,173,555 |
| StarHub | CC3 | 2,613 | 8.5 | -12.8 | 4.8 | 3,615,259 |
| Average | 1.4 | 13.0 | 14.5 |
Source: Bloomberg & StockFacts (data as of 5 March 2020)
Earnings Highlights
Singtel (3QFY20 ended 31 Dec 2019)
- Net profit declined 24% YoY to S$627 million, due mainly to weakness in the enterprise business, impact of the final settlement of a gain on the Airtel Africa pre-IPO investment, and lower exceptional gains.
- Operating revenue fell 5% to S$4.38 billion on lower equipment sales, weak business sentiment and spending, continued price erosion in carriage services and heightened market competition.
- Regional associates’ pre-tax profits rose 15% to S$393 million; Airtel narrowed losses on improved performance in India and Africa
- Free cash flow for 9M period gained 8% to S$2.74 billion.
- Outlook:
- The Group’s operations will continue to face intense competition and carriage declines amid weak business and consumer sentiment.
- Increased mobile market pricing and unbundling of handsets from mobile service plans in Australia have moderated customer adds and equipment sales; expect lower equipment sales and more sales of lower margin devices to continue.
- Group revenue to remain stable and EBITDA to decrease by low single digit.
- Capex to approximate S$2.1 billion, comprising A$1.3 billion for Optus and S$0.8 billion for rest of the Group.
- Free cash flow (excluding spectrum payments and dividends from associates) to be around S$2.3 billion.
- Dividends from regional associates expected at around S$1.3 billion.
Click here for the full results statement.
NetLink NBN Trust (3QFY20 ended 31 Dec 2019)
- Revenue of S$91.6 million, 2.9% higher YoY, mainly due to higher residential revenue.
- Profit after tax increased 9.6% to S$21.5 million.
- Net cash from operating activities rose to S$191.1 million in 9M period, vs S$168.8 million a year ago.
- Outlook:
- For FY ending 31 March 2020, the NetLink Group expects revenues from key connection services to be higher YoY mainly due to increased residential connections.
- As the Group will continue to invest and expand its network to improve the network’s capability and resiliency, it expects capital expenditure in FY20 to be higher YoY.
- The Group continues to expand its network in new housing estates.
Click here for the full results statement.
StarHub (4Q19/FY19 ended 31 Dec 2019)
- Net profit rises 115.6% YoY to S$33.3 million.
- Total revenue declines 1.8% to S$608.4 million.
- Free cash flow improved 50.5% YoY to S$218.6 million in FY2019.
- Outlook:
- StarHub intends to seek opportunities to diversify revenue streams and geographical presence through synergistic and accretive M&As.
- Based on current business conditions, and considering possible COVID-19 impact, StarHub expects 1%-3% YoY rise in service revenue in FY2020, lifted by higher contributions from the cybersecurity business but offset by lower Mobile and Pay TV revenues.
- FY2020 Service EBITDA margin expected at 27%-29% due to change in revenue mix.
- Excluding spectrum and 5G capex, capex commitment seen at 6%-7% of total revenue.
- In view of short- to mid-term cash flow requirements, as well as results from ongoing business transformation initiatives, StarHub intends to maintain a dividend per share of 9.0 cents for FY2020.
Click here for the full results statement.
5G Licence Bid Submissions
All four mobile operators in Singapore have submitted their bids for 5G licences in the city-state, with two making a joint submission.
Industry regulator Infocomm Media Development Authority (IMDA) said last month it received three bids at the close of the 5G Call for Proposal on 17 February 2020, with Singtel Mobile and Australia’s TPG Telecom submitting one bid each. M1 and StarHub submitted a joint bid for a licence.
IMDA said it is evaluating the submissions, and expects to award the spectrum by middle of the year. The regulator will assess, among other things, telcos' network security design and ability to achieve 50% islandwide coverage by end-2022.
Backbone of the Digital Economy
Singapore is expected to have two full-fledged standalone 5G networks covering more than half the island by end-2022, with deployments to begin this year. Full island-wide coverage is expected by 2025, and operators of the two nationwide networks will have to provide wholesale services to other operators, including mobile virtual network operators (MVNOs).
Singapore will likely be the first country in Southeast Asia to launch 5G services. The government has said 5G will form the backbone of the city-state’s digital economy, securing its competitive edge, and enhancing its appeal as a key trading and connectivity hub in the region and beyond.
The smaller 5G networks will meet Singapore’s immediate industrial needs, such as in smart ports and factories, for the remote operation of cranes or vehicles to move shipping containers or goods round the clock. They will also be useful for consumer applications like virtual reality and augmented reality gaming.
