Telco

Telco: Nomura issues telco report, Bearish on sector as a whole, with a Buy on M1 at TP$2.95, Neutral on SingTel with TP$3.35 and Reduce on Starhub at $2.30. House believes exclusive content cross-carriage measures poses earnings risk for both Starhub and SingTel though less material than initially anticipated. Bids for exclusive content should be reduced partly dependent on cross-carriage fees (details to be finalized)…

Currently only 4% of total TV content is available on both providers and 90 of 100 most viewed channels are on an exclusive basis. Singtel’s share is approx 33% of the pay-TV mkt but only 19% of rev share. This puts Starhub’s rev risk at est 3% and cost of protecting this stream could be high leading to higher earnings risk…

M1 is set to benefit from intro of cross-carriage measures which allows the opportunity to enter the pay-TV mkt. House states that focus will now shift to service and innovation instead of content for pay-TV mkt now.