DBS Group Research analyst Sachin Mittal says the coming 2023 will be “another exciting year” for the telecom sector, with mobile recovery set to continue, led by doubling of 5G users and tourist arrivals.
He is projecting 5G penetration of post-paid users to double to 40% in 2023 with 5G commanding a 15% to 20% premium over 4G pricing. Singtel’s 5G ARPU is $5 to $10 higher than its 4G ARPU, while StarHub’s ARPU is $12 to $13 higher than its 4G ARPU, at a 40% premium to its postpaid ARPU of $31. He is recommending “buy” for Singtel and “hold” for both StarHub and NetLink, with target prices of $3.15, $1.02 and 90 cents respectively.
He adds that an absence of English Premier League costs alone is likely to benefit Singtel’s core operating profit by 2% or $25 million to $30 million annually. “With further recovery in its core operating profit, we expect the HoldCo discount to narrow to 10% to 15% which was the case when core operating profit was stable before 2018,” Mittal explains.
“This would largely offset the recovery in mobile and enterprise revenue in FY2023. There could also be downside to our stable net profit projection in FY2023 depending on the cost impact of EPL,” says Mittal.whichever is higher in FY2022 and FY2023, implies a decent 5% yield for investors as they wait for recovery.
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