Wednesday, June 20, 2012
Telco: Credit Suisse sees positive indications for Next gen Nationwide Broadband Network (NBN) progress to accelerate. Says coverage is increasing, pricing is more competitive, while the “ecosystem” for fibre broadband services is also growing. Expects NBN penetration to reach 29% by end 2013e and 47% by end 2015e. The house views M1 as the key beneficiary, given an opportunity to penetrate the fixed line segment where it has limited exposure. Upgrades M1 to Outperform with TP $3, as it offers good medium term growth from mobile data and NBN, with attractive 6% div yield. Says Starhub may face higher pressure in residential, but this could be offset by opportunities in the corporate segment. Keeps at Neutral with TP $3.25, with solid yield to provide support. Expects SingTel to face pressure on both sides, as it needs to focus on developing new services / VAS to differentiate and maintain its revenue. Says SingTel’s significant regional diversification means the NBN impact to the group is not expected to be very material and its key growth driver remains its regional associates. Sees downside risks to consensus from foreign exchange headwinds; maintains Neutral with TP $3.19.