M1 (formerly: MobileOne)

[Ben]

Thanks CF for sharing, I am always amaze by how technology advance, and it is always a threat to businesses if they cannot adapt or change accordingly.

Ironically, telco wants to tie up with this new service so that they could squeeze out more money from their existing customers. OTHO, customers will likely want to switch to this service if it offers saving. So who win? How can telcos achieved more and at the same time its customers enjoys more saving? And a tie up with GNum will not be for free, so there is a cost impact to look out for.

The telcos are fighting against OTT providers because they are eating their lunches, and so if they can claim back their turf, or part of the turf, that is not bad. But you can bet that eventually these OTT providers will counter attack with something new. Facebook purchased WhatsApp for $22B. WeChat is owns by Tencent. These companies are worth multi billion dollars, much bigger than all the local three telcos combined. So they can and will protect their lunches. Just my 2 cents.

No matter how powerful the OTT players are, eventually the OTT service has to be riding on an infra. It can't or expansive to go via alternative infra.

There are valid points from telco perspective. The infra need capex to build and maintain, and it has to be paid back somewhere. Without the infra, the OTT services are useless. OTT/Telco are partners in nature, but competitors, IMO. The key question how the interest should be shared, which have no reference so far. The issue isn't only occur locally, but globally.

Is the model of Gnum/Telco a good future reference for other OTT service providers? I am observing...

(vested in M1, thus might be biased)

Agree with you point. My view is, with all these technology advancement and so many OTT providers, the landscape for telco is very different from the past. They can no longer bet on fat profits from providing the traditional voice services. They need to constantly adapt and evolve to maintain their relevance. It is getting tougher to operate. Telco used to be a sure bet, it no longer is, IMO.

[CityFarmer]

A rosy outlook for Singapore Telcos from CIMB. The increased in ARPU, should be able to offset the increased labour cost, which have been experienced by the three telcos

I am pleasantly surprised by the view of "potential nine to 17 cents a share of special dividend from M1"

(vested)

Higher mobile service revenue seen driving Singapore telcos’ 2015 earnings

SINGAPORE (Nov 20): Core earnings of the three Singapore telcos are likely to rise 4% to 5% next year, aided by higher revenues in the mobile business, according to CIMB ( Financial Dashboard).

Mobile revenues in Singapore are seen growing “at a healthy” 3.7% y-o-y in FY2015 and 4.3% the following year, driven by three rounds of tariff hikes since 2012 and rising data usage, CIMB analyst Foong Choong Chen said in a sector report.

“This is decent growth for a mature mobile market, where penetration is expected to hit 157% by end-2015,” he said.

The latest tariff hike by the three telcos was just a few months ago, when they raised prices on their post-paid plans by $2 to $5 a month in anticipation of an increase in contract renewals ahead of the launch of iPhone 6.

“The positive impact on mobile revenues will be felt over the next two years as post-paid subscribers progressively re-contract into these new plans,” said Foong.

Beyond the mobile business, however, prospects in Singapore for all three companies are less buoyant, he said.

Competition in the broadband space is expected to remain intense while growth in the pay-TV business will likely be muted.

For SingTel ( Financial Dashboard), CIMB forecasts 4.2% growth in its core earnings, with improvements at its overseas associates and Australian unit Optus offsetting continued losses at its digital advertising business.

SingTel is likely to keep its dividend payout ratio at 75%, translating to 17.8 cents a share.

As for M1, core earnings are seen growing 5% in FY2015, driven by higher mobile service revenue, which “will flow straight through to” EBITDA, boosting profit margins to 40.5% from an estimated 39.7% this year.

Given M1’s 80% payout ratio, shareholders can expect a dividend of 16 cents a share. The company may even pay a special dividend of nine to 17 cents a share, CIMB said.

For Starhub, core earnings next year are projected to rise 5%, aided by higher mobile service revenue, which could mitigate weaker performances by its fixed-line broadband and pay-TV businesses.

Starhub is expected to maintain its dividend of 20 cents a share but is unlikely to pay any special dividends for the next three years as it “will want to maintain some flexibility in its balance sheet”.

http://www.theedgemarkets.com/sg/article...5-earnings

[Dividend Warrior]

I am pleasantly surprised by the view of "potential nine to 17 cents a share of special dividend from M1"

(vested)

17 cents special dividend is really pushing the limit (not that I mind )

IMO, 9 cents is more realistic.

(vested)

[CityFarmer]

One more rosy report on Singapore telcos, from KayHian. The more encouraging one is M1 is among the BUY ratings, TP $4.00

(vested)

Singapore telcos maintained at ‘overweight’ by UOB-KayHian

SINGAPORE (Nov 28): UOB-KayHian is maintaining its “overweight” recommendation on Singapore’s telco sector as it provides attractive yields and quality earnings.

In a Nov 28 report, analyst Jonathan Koh expects increasing data usage and tiered data plans to sustain growth in Singapore’s mobile revenue and has buys on M1 and SingTel ( Financial Dashboard).
...
http://www.theedgemarkets.com/sg/article...ob-kayhian

[greengiraffe]

I think this is a case of analysts pushing their limits to justify their choice of stocks to BUY.

This is especially so in view of the lack of sector rotation in Singapore following the latest fall out of favour for O&G sector.

Honestly, one will be lucky if telcos track GDP given their mature business profile and falling IDD revenue to the popularity of free calls using data...

Time will tell.

GG

One more rosy report on Singapore telcos, from KayHian. The more encouraging one is M1 is among the BUY ratings, TP $4.00

(vested)

Singapore telcos maintained at ‘overweight’ by UOB-KayHian

SINGAPORE (Nov 28): UOB-KayHian is maintaining its “overweight” recommendation on Singapore’s telco sector as it provides attractive yields and quality earnings.

In a Nov 28 report, analyst Jonathan Koh expects increasing data usage and tiered data plans to sustain growth in Singapore’s mobile revenue and has buys on M1 and SingTel ( Financial Dashboard).
...
http://www.theedgemarkets.com/sg/article...ob-kayhian

[CityFarmer]

Yes, we shouldn't trust analyst report, which is an interested party's view.

Let's see what the past time will tell us.

Base on last 5 years, the price movement of Starhub and M1 are
Starhub: +106%, M1: +106% (excluding the dividend payout in the last 5 years for both of them)
* I exclude SingTel, since it is more of a global play, than a pure local telco

It is true that revenue growth is limited, but the cash generation of telcos shouldn't be undermined.

(vested in M1, but not in other 2 telcos)

I think this is a case of analysts pushing their limits to justify their choice of stocks to BUY.

This is especially so in view of the lack of sector rotation in Singapore following the latest fall out of favour for O&G sector.

Honestly, one will be lucky if telcos track GDP given their mature business profile and falling IDD revenue to the popularity of free calls using data...

Time will tell.

GG

[greengiraffe]

The outperformance is largely due to yield compression of money chasing quality earnings with certain but low growth. Telcos, REITs are good example.

With low global growth still on the horizon, there will be more of such money chasing similar concepts since high growth stocks are rare and hard to come by.

Some business model simply won't change just like Sing Post even with Alibaba as a strategic new economy type of shareholders.

Yes, we shouldn't trust analyst report, which is an interested party's view.

Let's see what the past time will tell us.

Base on last 5 years, the price movement of Starhub and M1 are
Starhub: +106%, M1: +106% (excluding the dividend payout in the last 5 years for both of them)
* I exclude SingTel, since it is more of a global play, than a pure local telco

It is true that revenue growth is limited, but the cash generation of telcos shouldn't be undermined.

(vested in M1, but not in other 2 telcos)

I think this is a case of analysts pushing their limits to justify their choice of stocks to BUY.

This is especially so in view of the lack of sector rotation in Singapore following the latest fall out of favour for O&G sector.

Honestly, one will be lucky if telcos track GDP given their mature business profile and falling IDD revenue to the popularity of free calls using data...

Time will tell.

GG

[CityFarmer]

The outperformance is largely due to yield compression of money chasing quality earnings with certain but low growth. Telcos, REITs are good example.

With low global growth still on the horizon, there will be more of such money chasing similar concepts since high growth stocks are rare and hard to come by.

Some business model simply won't change just like Sing Post even with Alibaba as a strategic new economy type of shareholders.

I concur. Mr. Market values "certainty", and Telcos provided the "certainty". I guess the game will be there as long as liquidity in the region remains.

[CityFarmer]

It is just a "1st", which might not necessary bring in more revenue. The are limited A-LTE handsets around now...

M1 the 1st to launch nationwide next-gen 4G service

SINGAPORE — M1 customers will get to lead the pack in experiencing next-generation 4G service at speeds of up to 300 mbps islandwide — double the current rate of up to 150mbps — the telco announced today (Dec 2).

Existing and new customers would get to experience the faster speeds at no extra charge.
...
http://www.todayonline.com/singapore/m1-...4g-network

[CityFarmer]

I recall the last time I saw him in AGM. He seemed very healthy and energetic. Life is real fragile...

RIP, Mr. Teo. Thank you for your contribution on M1.

(from a long term shareholder of M1)

---
The Board of Directors (the "Board") announces with regret that Mr Teo Soon Hoe ("Mr
Teo"), Chairman of the Company had passed away on 14 December 2014.
http://infopub.sgx.com/FileOpen/M1_Annou...eID=328240

The relevant news article below
http://www.straitstimes.com/news/busines...5-20141214