Singtel

Singtel: CS note that it had upgrade grp to OUTPERFORM on 19 Nov, with a more positive view on Bharti, and expect all four key associates to contribute to SingTel’s profit growth despite a challenging growth outlook for its core businesses. Expect a 17% CAGR in the FY3/12-15E PBT contribution from associates to drive a 5% profit CAGR for SingTel over the period. House note that Bharti’s weak results have been one of the key headwinds for SingTel over the past few years. However, believe new regulations and experience from Bharti’s price aggression over the past 12 mths could make the Indian market receptive to tariff hikes. Moreover, regulatory uncertainties have declined as spectrum auctions are behind us and key decisions have been taken by the govt. House believe reducing competitive intensity means the QoQ recovery trend that already started in 2Q3/13 could be sustained. Add that while core businesses should be resilient. SingTel is facing challenges in its core operations in Singapore and Australia. However, note that: (1) it has shown effective cost control so far, (2) base case has already factored in a decline in EBITDA (-1.5% FY3/12-15E CAGR), and (3) the co is already working on improving data monetisation and other initiatives (e.g., Digital Life strategies) that could add to medium- to longer-term growth