842 views
Singtel

Singapore telcos face stiff competition ahead

Singtel is RHB’s top pick.

Singapore’s major telecom operators saw roaming traffic improve and cost restraint ease during the fourth quarter of last year, although RHB Research cautioned that tight competition in the industry is expected to continue moving forward.

Analysts at RHB said the telco industry posted mixed results during the latest reporting season, with FX weakness and lower associate contributions hurting Singapore Telecommunications Ltd., while StarHub exceeded expectations due to lower-than-expected depreciation.

Overall, the sector’s mobile average revenue per unit (ARPU) continued to increase mainly due to recovering roaming traffic and greater 5G adoption. The enterprise segment, however, was still hampered by the challenging macro environment and prolonged inflationary pressures, despite a resilient “structural demand” for digital.

Moving forward, they said the sector will likely keep its focus on cost optimisation while market consolidation remains a possibility for the medium to long term.

“Competition within mobile still keen with Simba Telecom on the offensive,” they said in a 14 March note. “While the price skirmish is largely focused at the lower end of the market and involves mobile virtual network operators, Singtel and StarHub have responded via tactical promotions.”

Singtel was RHB’s top pick thanks to its improving return on invested capital, capital management prospects, and exposure to key markets undergoing price reparation.

“We believe Singtel is on track to meet the higher end of its 70-90% DPR (1HFY24: 77% DPR), supported by capital management activities and 1.5x net debt/EBITDA,” the analysts wrote. “Downside risks: Competition, weaker than expected earnings and FX rates.”

READ MORE: Singtel’s net profit soars 83% YoY to $2.14b in 1H24

Follow the link s for more news on

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!