Telcos: Maybank-KE factors the potential entry of a fourth mobile operator, as MyRepublic and Consistel signal interest. MyRepublic could participate in the next 4G spectrum auction at end-15 or early 2016, and if successful, it could mark an entry by end 2016/ 2017.
Factoring this, Maybank-KE reshuffles its order preference for telcos. It now favors StarHub, given its strong bundled plans and compelling TV content.
Meanwhile, M1 and SingTel are downgraded in light of their vulnerabilities from having less attractive bundling plans, in which M1 is most at risk.
Aside, the house also highlights that the data monetization theme has already run half its course, and expects tiered data plan users to be 70-75% by year end, and almost all of post-paid users by 2018.
The house also downgrades the telco sector to Neutral citing a lack of immediate catalysts. Telcos are now trading close to 2 SD below their 8-year average yields, while spreads with the 10 year SGS is also close to -2SD
Maybank-KE has the following ratings for telcos:
StarHub: Upgraded to Buy from Hold, TP increased to $5.00 from $4.40
SingTel: Downgraded to Hold from Buy, TP increased to $4.55 from $4.43
M1: Downgraded to Hold from Buy, TP cut to $3.65 from $4.24
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