Action
Singapore and Optus reported solid 1Q FY11 results, while Associates were
relatively disappointing again. Total revenue was up 12% y-y, but EBITDA rose
only 1% largely due to a 15% drop in Associates’ contribution. Singapore outlook
remains strong, while there could be some concerns for Optus as Telstra is looking
to increase its variable costs significantly to regain share this year. At the same
time, we think operating trends at Bharti and Telkomsel could improve over the
balance of the year; hence, we still like SingTel for its diversified earnings. BUY.
ō”Catalysts
Improved operational trends at Bharti, further traction in Singapore and Australia,
and capital management are potential catalysts.
Anchor themes
Volatility due to rising competition in regional markets could persist, but SingTel’s
associates have strong market positions, balance sheets and earnings outlook.
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