Singtel

Singtel: Citi has insights of recent events in India, which saw India’s Supreme Court cancelled 122 licenses on 2G. Bharti saw no license cancellation while Idea Cellular saw cancellations of 9 licenses, mostly in their smaller loss-making areas. However, smaller but aggressive players such as Uninor, VideoCon, and Loop, saw significant license cancellations (21-22 each).

Note that license cancellations of these smaller players may potentially allow for traffic re-distributions and softer competitive intensity for incumbents such as Idea and Bharti. This in turn is potentially positive for Singtel and Axiata given their India exposure.

Add that if smaller Indian players such as Uninor drop out altogether, and traffic from lost licenses re-distributed to scale operators such as Bharti and Idea in proportion to their market share, may see Bharti’s FY13E profit rising by 5.5% and Idea’s FY13E profit rising by 5.9%. However, scope for earnings change may be much higher depending on how competition evolves post licensing. Overall, keep both Singtel and Axiata at Buy.