Telco

Telco: Maybank-KE believes the S’pore telco market will likely remain subdued in 2014. Data will be hot but fixed broadband and Pay TV will stay competitive. But winners can be found in two areas: i) data monetization, and ii) capital management. Top Buy is M1, followed by Starhub. SingTel remains a Hold due to a lack of either growth or dividend catalysts. M1 (Buy, TP $3.98): stands to gain the most from the surge in data traffic. Maybank-KE pencils 15% growth in 2013 followed by 8% in 2014, the fastest of the three telcos under its coverage. Considering its low gearing, M1 may well increase its dividend payout to 100% from 80% currently. Starhub (Buy, TP $5.13): aside from data monetization, the firm may benefit from revenue recovery for data roaming and Pay TV now that BPL is back. It may also raise ordinary dividends.