Singtel

Singtel: Could see some negative sentiment, after Temasek was reportedly selling 400-500m shares of SingTel ($1.3-1.67m, 2.4-3.1% of shares outstanding) at a 2.4-3.9% discount to close. CLSA sympathies with Temasek’s desire to sell-down and reiterate non-consensus SELL on SingTel with a target price of $3.11. Note that net profit is declining: 1Q13 underlying net profit declined -2.6% YoY and came in at 22% of Consensus 1Q13 and FY13 expectations. Add that SingTel in SG is chasing subs (mkt share up to 46.4%, but SAC up 2.5% and ARPU down -8%) this is to build a base for digital content/services whereas Australia is focusing on QoS as a differentiator rather than price and this is proving to be a painful transition and divergent from SG’s strategy Estimate that Barclays Premier League rights could come in at $600m (vs $400m in 2009) – this would suggest a joint bid from SingTel and StarHub SG$300m each. Although this would be lower than previous round, a lack of exclusivity since cross carriage makes justifying high bids (capex) economically hard and div growth unlikely. Also concerned about SingTel spending $321m on a digital marketing company (Amobee in April), $12m on a food blog (Hungrygowhere in May) and a stake in TheMobileGamer for $1.5m yesterday. Add that associates are a mixed bag. The other concerns house have heard from investors is that if Bharti were to raise equity, SingTel might subscribe.