SingTel

SingTel: According to Morgan Stanley, Australian wholly-owned subsidiary Optus has upped the competitive ante offering customers up to A$450 credit to entice customers to switch around the upcoming iPhone 6 launch. A similar strategy in the US by T-Mobile had worked. Optus’ performance is the weakest amongst peers Vodafone and Telstra, therefore is more likely to gain than to lose from these competitive tools. The A$450 is split into A$250 phone trade-in and A$200 early exit credit. The former is hedged by reselling phones to third party providers at about the same price, and the latter will result in ~A$8 reduction in ARPU after amortization over 24 months. Optus is targeting the high-end market, which is currently dominated by Telstra, by increasing its data allowance for its A$80/A$100 plans from 3GB/5GB to 5GB/8GB. MS rates SingTel as Overweight with TP $4.50, our house rates SingTel as Buy with TP $4.32