SingTel could still be eyeing lucrative Myanmar market

Mobile market worth an estimated $2.6-3.6b.

According to OCBC Investment Research, SingTel may have lost the recent round of licence awardings but it could still snap up opportunities "at a later stage when the industry is more settled and the regulatory environment is more established."

The research firm said the licence snub may have been a blessing in disguise for the telco, and that it may well enter the market in the future given its fast-growing mobile population.

Here's more from OCBC:

Not among winners in Myanmar. SingTel, despite being widely touted as a front-runner, was not among the two winners of the 15-year telecommunications licences in Myanmar. Instead, Norway’s Telenor and Qatar’s Ooredoo (formerly known as Qatar Telecoms) won these much-coveted licences to roll out telecommunications infrastructure across the country which probably has one of the lowest mobile penetration rates of just 10% in the world.

May not be a bad thing. While SingTel did initially suffer a minor pullback in its share price after the announcement of the results, we note that it was probably due to the sharp run-up in share price just prior to the news. But overall, not winning it may not be a bad thing, given the massive scale involved in the infrastructure roll-out, where some market watchers believe that the capital investment could run into the tens of billions of dollars. Ooredoo will reportedly invest US$15b over the 15-year period. Furthermore, we note that the regulatory environment is still very uncertain there, and that could probably put a cap on subscription rates, which could result in operating losses for the first few years.

Still opportunities to get involved at a later stage. However, we believe that there are still opportunities for SingTel to get involved at a later stage when the industry is more settled and the regulatory environment is more established. Market watchers estimate that the mobile market in Myanmar could be worth some US$2.6-3.0b in 2016.

Maintain HOLD. Separately, we see the recent volatility in the regional currencies as the biggest risk factor, as SingTel is especially exposed to AUD/SGD movements because of Optus. However, we do note that some value is starting to emerge around current levels, as SingTel has fallen back to below our SOTP fair value of S$3.83. Hence we maintain our HOLD rating and would be buyers closer to S$3.50.