Sector Update Telecommunications€¦ · For further information on this report, kindly contact Jeffrey Tan at +603 9207 7633 MARKET DATELINE THAILAND EQUITY Investment Research Sector

RHB Research PP 7767/09/2012 (030475) 10 Apr 2013

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Powered by Enhanced Datasystems’ EFA Platform For further information on this report, kindly contact Jeffrey Tan at +603 9207 7633

MARKET DATELINE

THAILAND EQUITY

Investment Research

Sector Update

Telecommunications

Potential For Earnings Upside

We are upgrading the FVs for ADVANC and DTAC to THB277 and

THB116 respectively after revisiting our assumptions on 3G migration,

which appears to be conservative. We are also imputing higher

handset sales given that current smartphone penetration of 20% is

likely to accelerate once 3G (2.1GHz) services are fully-commissioned

later this quarter. Maintain OVERWEIGHT on Thai telecoms given their

decent FY13-FY15 core earnings CAGR of 16.4%. We prefer ADVANC

on the back of its more aggressive pursuit of 3G subscribers.

Earnings upside from quicker 3G migration. We have raised our FY13-

FY14 core earnings forecasts for ADVANC by 6%-7% and DTAC by 7%-14% on

the back of a faster subscriber migration to 3G services. We now assume its 2G

subscribers will be fully converted within five years from seven years

previously. Hence, the savings from regulatory cost would be more apparent

and could help offset rising depreciation and amortisation (D&A), network-

related and marketing costs. Since the rollout of interim 3G services, 9% and

13% of DTAC’s and ADVANC’s subscribers have moved to 3G.

Losing its voice. The structural voice erosion in the Thai mobile market has

gained momentum following the rollout of interim 3G services. While call traffic

is still rising, voice revenue growth has trickled down to single-digit levels due

to data cannibalisation. ADVANC plans to leverage on its stronghold in the

upcountry to grow basic voice services, while DTAC has stated its intention to

resuscitate voice revenues after network issues in late 2011/early 2012 eroded

its voice services market share. Our projection of voice revenue growth of 1%-

3% for FY13/FY14 is consistent with management’s guidance.

Rising 3G capex and opex. ADVANC and DTAC are looking to invest

THB70bn and THB34bn to achieve 97% and 80% population coverage by 2015

respectively. The rise in capex and spectrum fees (from the award of the

2.1GHz spectrum last December) will bump up D&A expenses from FY13.

Network opex such as base station rental and utility expenses are expected to

increase from the rollout and commissioning of more 3G sites and co-location

while A&P spending is set to increase from marketing efforts and promotions to

raise awareness of 3G.

OVERWEIGHT

Stock Price Target ROE DY P/NTA (x) Rating

Dec-13F Dec-14F Dec-13F Dec-13F 1mth 3mth 12mth Dec-13F

Advanced Info Services THB228 THB277 23,359 5.575 18.2 16.1 82.4% 5.5% 5.1% 13.4% 30.7% 21.2 BUY

Total Access Communication PCLTHB93 THB116 7,588 3.110 20.1 16.1 34.4% 4.5% 10.1% 7.8% 13.1% 14.6 BUY

Mkt Cap

US$m

Volume

m

P/E (x) Rel. Perf. (%)

Source: Company data, RHBRI estimates

ratree.lu

Typewritten Text

Thailand Research Team. +66 (0) 2 862 9999 Ext.2030

RHB Research


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2

TABLE OF CONTENTS

Table of Contents ..................................................................................... 2

Revenue Growth Intact ............................................................................. 3

Long-Term Cost Savings ........................................................................... 6

Forecasts And Valuations ........................................................................... 8

Appendices ............................................................................................ 10

RHB Research


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3

REVENUE GROWTH INTACT

Voice comes under pressure. Structural voice erosion in the Thai mobile

market became more prevalent following the introduction of interim 3G services

in 3Q11. Although industry minutes of usage (MOU) rose last year, ADVANC’s FY12 voice revenue expanded 4.8% y-o-y (vs FY11: +7.6% y-o-y) while the same contracted by 1.7% (vs FY11: +3.9% y-o-y) for DTAC. We think the phenomenon is primarily driven by the composition of bundled services, where telcos offered more free minutes to attract new subscribers onto their network. However, customers may have under-consumed the bundled minutes and

hence, telcos were not able to capitalise on out-of-bundle tariffs to boost voice revenue. Also, the high base effect and cannibalisation by data usage forced voice revenue to grow at a slower pace. For FY13, we reckon ADVANC will continue to exploit its wide network coverage in the upcountry region to sustain some form of voice growth. Its product segmentation strategy was executed effectively in FY12 and we believe it will

be replicated this year. Management has guided for FY13 voice revenue to grow at a slow pace of 2%-3% y-o-y. On the other hand, DTAC intends to engage in

voice resuscitation efforts, after overlooking this segment last year. Management intends to tap into the upcountry market to strengthen its footprint in this area. We understand DTAC has approximately 30% share while ADVANC has about 50% share.

Figure 1 Quarterly voice revenue trend Figure 2 Quarterly voice revenue vs MOU trend

Title:

Source:

Please fill in the values above to have them entered in your report

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Launch of interim 3G

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Source: RHBRI, Companies Source: RHBRI, Companies

Big appetite for data. The non-voice revenue of both ADVANC and DTAC grew

robustly by 32.7% and 49.2% y-o-y respectively in FY12, given the insatiable appetite for data along with declining price-points of smartphones and tablets to encourage usage. Last year, handset sales rose, regardless whether it was a premium or a basic entry-level device. Smartphone penetration in Thailand remains low at only 20% and 3G subscription is also in its infancy, culling only about 50% of smartphone users. This indicates that the 3G market is still

largely untapped. Thus far, telcos are still competing rationally. For the next

couple of years, we expect to see non-voice revenue to continue to grow at a healthy clip, supported by a more mature 3G device ecosystem. ADVANC expects its FY13 non-voice revenue to climb by 25%-30% y-o-y and similarly, DTAC had guided its top-line to rise at high single digit, spurred by mobile internet services. We reckon these growth guidance are achievable as both telcos are looking to launch their maiden 3G-2.1GHz services in 2QFY13.

Since this license facilitates significant regulatory cost savings, we expect to see rising competition to acquire new 3G subscribers. However, the fights should be tactical rather than offensive to avoid hurting their books.

We think telcos were not able to capitalise

on out-of-bundle tariffs to boost voice

revenue.

ADVANC will continue to tap on its

stronghold in the upcountry market to

sustain voice growth while DTAC intends to engage in voice resuscitation efforts.

Non-voice revenue will continue to grow at

a healthy clip, supported by a more mature

3G device ecosystem.

Telcos to pick their fights wisely, opting for

tactical rather than offensive moves to

safeguard their interests without hurting

their books.

RHB Research


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4

Figure 3 Trends in revenue components

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Source: RHBRI, Companies

Figure 4 Quarterly smartphone subscribers and penetration rate

Figure 5 Quarterly 3G subscribers and penetration rate

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Introduction of interim 3G services

Non-voice revenue continues to grow robustly. We expect

this trend to persist in FY13

Handset sales have grown considerably for the past two years and FY13 is no exception.

Smartphone penetration is still low at only 20%

Contribution from non-voice is becoming more significant

Sales of iPhone4 (23 Sept 10)

Sales of iPhone4S (16 Dec 11)

Sales of iPhone5 (2 Nov 12)

RHB Research


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5

Figure 6 Telcos are still competing rationally as industry ARPU and ARPM are stable

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Source: RHBRI, NBTC Source: RHBRI, NBTC

3G roaming charges to be decided soon. We are impartial over the intervention of National Broadcasting and Telecommunications Commission (NBTC) to cut the interconnect (IC) charge rate to THB0.45/minute. This was previously already self-regulated by telcos themselves (rates ranged from THB0.5/minute-THB1.0/minute). As a result of the rate cut, IC revenue and IC

expense will decrease accordingly. Thus, net IC recipients like ADVANC and DTAC are poised to receive lesser IC profit in the future. That said, the impact to ADVANC is immaterial as it contributes 1.6% to its core earnings but should be substantial to DTAC as IC profit makes up approximately 7.2% of its core earnings.

On the upside, however, roaming charges for bridging 3G and 2G networks will be set at THB0.45/minute instead of THB1.0/minute as previously thought. In turn, the quantum of additional revenue share incurred on roaming charges

should be lesser, easing some pressure on EBITDA margins. We expect telcos to revise their guidance during the next analyst conference call.

Figure 7 IC profit as a % of core earnings (ADVANC) Figure 8 IC profit as a % of core earnings (DTAC)

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Source: RHBRI, ADVANC Source: RHBRI, DTAC

The impact of IC rate cut would affect DTAC

more than ADVANC.

Quantum of additional revenue share

incurred on roaming charges should be

lesser.

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6

Figure 9 Roaming and rental fee mechanism

900MHz

Company

IC Charge

Bi-lateral agreement

IC rate to be determined

2.1GHz

Company

Roaming charge

To be determined

Site & infrastructure rent

Tower

Part of transmission

Subjected to 30%

revenue share to TOT

Subjected to 30%

revenue share to TOT

1

2

3

Source: RHBRI, ADVANC

LONG-TERM COST SAVINGS

3G capex to spike in 2013-2015. ADVANC and DTAC are adopting two related but dissimilar approaches in rolling out their respective 3G-2.1GHz

network – the former is aggressive while the latter is conservative with their rollout plans for the next three years. We understand ADVANC is looking to

invest THB70bn over the next three years and hopes to achieve 97% coverage by FY15 (20k 2.1GHz sites). On the other hand, DTAC intends to erect 11.5k sites (population coverage of 80%) for the same tenure but with a lesser capex amount of THB34bn. Note that NBTC has necessitated that all 3G spectrum license holders are to provide coverage of at least 50% and 80% of the

population within two and four years respectively. We reckon ADVANC is trying to reduce its operational risks given that its build-transfer-operate (BTO) concessions with CAT (1.8GHz) and TOT (900MHz) are due to expire in FY13 and FY15 respectively. As for DTAC, it intends to progressively roll out 3G services on the 2.1GHz bandwidth to take into account the level of smartphone penetration in the market. For now, the company seeks

to tap and leverage on its existing 850MHz bandwidth to provide an interim 3G service to the masses. For the past two years, DTAC already spent a substantial amount of capex to expand its 3G-850MHz coverage (now at 60% of population coverage) and also to modernize its 2G networks.

Thus, with the rising capex and also the auction fee paid for the 2x15MHz

bandwidth on the 2.1GHz spectrum late last year, we expect to see the depreciation and amortization (D&A) expenses of these telcos to increase in FY13. However, we think the D&A pressure on their books are going to be on different scales given their dissimilar approaches in rolling out their respective 3G-2.1GHz network. We foresee a softer y-o-y impact on ADVANC compared to DTAC, as the former is currently sitting at the tail-end of its BTO concessions, entailing a much lower amortization cost which could be offset against the rise

in D&A highlighted earlier. However, DTAC may be plagued by higher y-o-y D&A cost due to its earlier capex commitments with a shorter useful life (BTO concession with CAT expires in 2018).

NBTC has necessitated all 3G spectrum

license holders to provide coverage of at

least 50%/80% of the population within

two/four years.

ADVANC is looking to aggressively roll out

its 3G-2.1GHz network while DTAC intends

to progressively do the same.

Higher D&A cost to kick in and we reckon

the impact on DTAC will be greater.

RHB Research


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7

Figure 10 Impact from 3G-2.1GHz capex (ADVANC) Figure 11 Impact from 3G-2.1GHz capex (DTAC)

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Figure 12 ADVANC's D&A expense Figure 13 DTAC's D&A expense

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On top of that, network opex is set to rise as both telcos incur higher land rental and electricity expenses from the rollout of more 3G towers and co-locating their networks. Furthermore, their FY13 marketing expenses are also expected to be higher due to increased efforts in spurring 3G product awareness. That said, ADVANC had guided its FY13 EBITDA margin to decrease to 41%-42% (from 43.4% in FY12) while DTAC expects to sustain it at the

30%-31% level. DTAC may also face another rising cost item i.e. higher interest expenses, as a result from its financial restructuring initiative early last year and a possibility of incurring debt to finance its 3G capex.

Network opex and marketing expense are

expected to increase as well.

RHB Research


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8

FORECASTS AND VALUATIONS

Upside to our earnings forecasts. Following a review of our models, we

believe we have been overly conservative in our assumptions for subscriber

migration to 3G. We also think there is an upside to our forecast on handset sales given the current low smartphone penetration of 20%. ADVANC’s core profit forecast up by 7% for FY13/14. We have increased our revenue forecast a tad higher on the back of more affordable 3G devices coming onto the market. We reckon it bodes well for the company as it

commands the largest share of the upcountry market. We also revised up our 3G-2.1GHz subscriber conversion assumption as we think ADVANC may look to migrate its subscribers at a quicker pace given that its BTO concessions are coming to an end in FY13 and FY15. Note that we had previously assumed a full migration into 3G within seven years but have now assumed all subscribers will be converted in just five years. As a result, regulatory cost savings would be greater and this could aid in offsetting the abovementioned cost pressures. In

turn, our FY13-FY14 profit projections are bumped up and we arrive at our new FV, at THB277, based on FCFF valuation (WACC: 9.2%, TG: 1.5%).

Figure 14 ADVANC’s management guidance and RHB’s forecast for FY13

ADVANC Management guidance RHB forecast

Service revenue growth (% y-o-y) 6.0-8.0 9.1

Voice revenue growth (% y-o-y) 2.0-3.0 2.7

Non-voice revenue growth (% y-o-y) 25.0-30.0 30.3

EBITDA margin (%) 41.0-42.0 42.7

Capex (THBbn) 70 within 3 years Same

3G-2.1GHz subscribers (m) 8.0-10.0 10.0 Source: RHBRI, ADVANC

Figure 15 Revisions to our forecast (ADVANC)

Before FV: THB240 After FV: THB277

FYE Dec (THBm) FY2013f FY2014f FYE Dec (THBm) FY2013f FY2014f FY2013f FY2014f

Revenue 148,083.6 160,226.5 Revenue 151,784.4 161,144.7 2.5 0.6

EBITDA 61,516.8 69,508.5 EBITDA 64,744.0 72,774.8 5.2 4.7

EBIT 44,514.0 50,842.3 EBIT 47,378.5 54,184.6 6.4 6.6

PBT 43,962.8 49,616.1 PBT 46,827.3 52,958.3 6.5 6.7

Normalized PATAMI 34,994.4 39,494.4 Normalized PATAMI 37,274.5 42,154.8 6.5 6.7

FY2013f FY2014f

EBITDA 41.5 43.4 EBITDA 42.7 45.2 1.1 1.8

EBIT 30.1 31.7 EBIT 31.2 33.6 1.2 1.9

PBT 29.7 31.0 PBT 30.9 32.9 1.2 1.9

Normalized PATAMI 23.6 24.6 Normalized PATAMI 24.6 26.2 0.9 1.5

FY2013f FY2014f

3G-2.1GHz subs

conversion (m)7.4 14.7

3G-2.1GHz subs

conversion (m)10.0 18.0 34.5 22.8

% conversion 20.0 38.0 % conversion 26.9 46.7 6.9 8.7

% changeAssumptions FY2013f FY2014f Assumptions FY2013f FY2014f

% change

Margins (%) FY2013f FY2014f Margins (%) FY2013f FY2014f% change

Source: RHBRI

Overly conservative with the assumptions

used for 3G subscriber migration.

We derived a new FV for ADVANC at

THB277. The company is looking to launch its maiden 3G-2.1GHz services in early May.

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9

Raising DTAC core profit forecast by 7%-14%. As for DTAC, we ascribed similar assumptions across our forecasts and revised up our FY13-FY14 profit

projections. Consequently, its FV was lifted to THB116, from THB103

previously, based on a FCFF valuation (WACC: 10.6%, TG: 1%). However, this year, we reckon elevated D&A and finance expenses may drag its earnings but growth is expected to return in FY14 as regulatory cost savings become more significant.

Figure 16 Management guidance and RHB forecast for FY13

DTAC Management guidance RHB forecast

Revenue growth (% y-o-y) High single digit 6.8

EBITDA margin (%) 30.0-31.0 30.0

Capex (THBbn) 34 within 3 years 37 within 3 years

3G-2.1GHz subscribers (m) 8.0-10.0 8.0 Source: RHBRI, DTAC

Figure 17 Revisions to our forecast (DTAC)

Before FV: THB103 After FV: THB116

FYE Dec (THBm) FY2013f FY2014f FYE Dec (THBm) FY2013f FY2014f FY2013f FY2014f

Revenue 95,102.9 98,982.1 Revenue 95,586.6 99,972.8 0.5 1.0

EBITDA 27,896.4 30,924.4 EBITDA 28,717.0 33,700.7 2.9 9.0

EBIT 14,182.5 16,624.3 EBIT 15,068.3 18,679.5 6.2 12.4

PBT 12,829.3 14,995.4 PBT 13,715.1 17,050.6 6.9 13.7

Normalized PATAMI 10,268.6 12,002.3 Normalized PATAMI 10,977.5 13,647.3 6.9 13.7

FY2013f FY2014f

EBITDA 29.3 31.2 EBITDA 30.0 33.7 0.7 2.5

EBIT 14.9 16.8 EBIT 15.8 18.7 0.9 1.9

PBT 13.5 15.1 PBT 14.3 17.1 0.9 1.9

Normalized PATAMI 10.8 12.1 Normalized PATAMI 11.5 13.7 0.7 1.5

FY2013f FY2014f

3G-2.1GHz subs

conversion (m)5.3 10.4

3G-2.1GHz subs

conversion (m)8.0 14.0 49.7 34.4

% conversion 20.0 37.0 % conversion 29.9 49.7 9.9 12.7

% changeAssumptions FY2013f FY2014f Assumptions FY2013f FY2014f

% change

Margins (%) FY2013f FY2014f Margins (%) FY2013f FY2014f% change

Source: RHBRI

We are reiterating our OVERWEIGHT recommendation on the sector as we reckon Thai telcos have the best growth potential when compared against their regional peers. Although the rollout of 3G-2.1GHz services may exert some pressure on their bottomlines in the short term, we believe both ADVANC and DTAC stand to benefit significantly over the longer term – this is in view of the regulatory cost savings under the single licensing framework as well as lower corporate tax rate. Furthermore, valuation and yields of the telcos are

attractive and undemanding at their current levels. Our top pick is ADVANC as it carries less investment risks, being the domestic incumbent with a strong balance sheet (D/E ratio of 0.5x).

We derived a new FV for DTAC at THB116.

The company is looking to launch its

maiden 3G-2.1GHz services in late June.

Overweight on the sector. ADVANC remains

as our top pick.

RHB Research


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10

APPENDICES

Figure 18 ADVANC's financial statements

Income Statement (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Revenue 102,451.8 111,279.6 126,437.2 141,568.3 151,784.4 161,144.7

EBITDA 45,892.0 52,063.0 56,623.0 61,436.0 64,744.0 72,774.8

EBIT 25,781.3 32,696.1 38,947.7 45,806.1 47,378.5 54,184.6

PBT 24,207.7 30,033.9 36,709.3 45,613.6 46,827.3 52,958.3

PATAMI 17,055.4 20,547.4 22,217.7 34,883.2 37,274.5 42,154.8

Core earnings 17,616.0 22,107.4 26,599.7 34,883.2 37,274.5 42,154.8

y-o-y growth (%)

Revenue -7.5 8.6 13.6 12.0 7.2 6.2

EBITDA -1.1 13.4 8.8 8.5 5.4 12.4

Core earnings -14.6 25.5 20.3 31.1 6.9 13.1

Margin (%)

EBITDA 44.8 46.8 44.8 43.4 42.7 45.2

Core earnings 17.2 19.9 21.0 24.6 24.6 26.2

Balance Sheet (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Current assets 33,571.4 25,902.9 33,177.9 38,103.4 27,781.7 35,699.7

Non-current assets 91,454.3 71,554.5 53,494.5 62,864.5 81,006.6 85,213.2

Total assets 125,025.7 97,457.4 86,672.3 100,967.9 108,788.3 120,912.9

Share capital 2,965.4 2,970.1 2,973.1 2,973.1 2,973.1 2,973.1

Reserves 68,645.8 38,206.2 36,280.6 40,380.1 44,182.3 46,622.5

Minority interests 199.8 303.4 209.9 188.7 376.0 587.8

Shareholders' funds 71,811.0 41,479.7 39,463.6 43,541.9 47,531.4 50,183.4

Current liabilities 16,583.1 35,489.1 29,734.4 36,287.6 39,820.6 41,639.7

Non-current liabilities 36,631.6 20,488.6 17,474.3 21,138.4 21,435.9 29,089.4

Total liabilities 53,214.7 55,977.7 47,208.8 57,426.0 61,256.6 70,729.1

Cash Flow (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Operating cash flow 40,913.5 45,224.2 48,216.4 51,132.6 54,414.3 61,504.8

Investing cash flow -12,592.4 -5,799.5 -1,581.0 -16,758.5 -34,650.0 -22,150.0

Financing cash flow -19,060.6 -53,234.6 -38,726.1 -32,901.7 -35,923.5 -32,840.9

Source: RHBRI, ADVANC

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Figure 19 DTAC's financial statements

Income Statement (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Revenue 65,685.5 72,351.4 79,298.1 89,497.4 95,586.6 99,972.8

EBITDA 20,214.7 25,685.9 27,296.4 26,809.4 28,717.0 33,700.7

EBIT 10,193.5 15,386.0 16,817.2 15,420.4 15,068.3 18,679.5

PBT 8,855.4 14,555.2 17,078.2 14,799.5 13,715.1 17,050.6

PATAMI 6,627.8 10,891.5 11,812.9 11,278.1 10,977.5 13,647.3

Core earnings 6,684.4 10,915.2 12,269.8 11,235.1 10,977.5 13,647.3

y-o-y growth (%)

Revenue -3.0 10.1 9.6 12.9 6.8 4.6

EBITDA -12.8 27.1 6.3 -1.8 7.1 17.4

Core earnings -4.5 63.3 12.4 -8.4 -2.3 24.3

Margin (%)

EBITDA 30.8 35.5 34.4 30.0 30.0 33.7

Core earnings 10.2 15.1 15.5 12.6 11.5 13.7

Balance Sheet (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Current assets 15,979.7 21,500.4 31,125.4 16,969.2 25,462.2 23,174.1

Non-current assets 84,100.2 77,812.7 72,721.5 84,049.1 82,059.7 80,576.0

Total assets 100,079.9 99,313.2 103,846.9 101,018.3 107,521.9 103,750.1

Share capital 4,735.6 4,735.6 4,735.6 4,735.6 4,735.6 4,735.6

Reserves 57,790.4 64,127.2 30,135.0 30,193.8 24,250.3 26,816.4

Minority interests 21.7 14.9 17.0 14.5 9.0 2.2

Shareholders' funds 62,547.6 68,877.8 34,887.7 34,943.9 28,995.0 31,554.3

Current liabilities 25,258.3 25,200.0 64,850.1 37,800.0 38,163.5 34,737.3

Non-current liabilities 12,273.9 5,235.4 4,109.1 28,274.4 40,363.4 37,458.6

Total liabilities 37,532.3 30,435.4 68,959.2 66,074.4 78,526.9 72,195.8

Cash Flow (THBm) FY09 FY10 FY11 FY12 FY13f FY14f

Operating cash flow 20,657.2 23,794.7 26,748.9 22,691.7 19,601.8 25,100.8

Investing cash flow -7,138.5 -1,778.2 -5,214.8 -15,087.7 -11,659.3 -13,537.5

Financing cash flow -14,203.4 -15,581.7 -12,208.6 -24,922.5 -3,434.6 -17,096.4

Source: RHBRI, DTAC

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Figure 20 Regional valuation comparison

Company Bloomberg Currency Price Mkt Cap

Ticker (USDm) FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14

Malaysia

Axiata AXIATA MK MYR 6.66 18,684.5 19.8 18.9 1.4 4.0 8.1 7.6 2.5 2.4 3.8 4.0

DiGi DIGI MK MYR 4.63 11,851.7 23.2 20.1 0.8 1.3 11.7 11.0 140.4 140.4 4.3 4.9

Maxis MAXIS MK MYR 6.58 16,248.9 23.7 23.4 1.9 21.7 12.2 12.0 9.0 10.0 6.1 6.1

TM T MK MYR 5.40 6,360.0 26.5 24.3 -0.6 2.8 6.8 6.4 2.8 2.8 3.6 3.7

Time dotCom TDC MK MYR 4.16 784.9 15.8 14.9 -0.6 2.5 12.5 10.4 1.0 0.9 0.0 0.0

Singapore

SingTel ST SP SGD 3.66 47,083.9 15.5 15.2 7.2 7.2 9.0 8.8 2.2 2.0 4.6 4.6

StarHub STH SP SGD 4.37 6,061.4 23.0 19.9 -2.4 1.3 11.0 10.0 nm nm 4.6 4.6

M1 M1 SP SGD 3.00 2,222.8 16.7 14.3 1.3 0.9 9.5 8.3 7.2 6.2 4.9 4.7

Indonesia

Telkom TLKM IJ IDR 10,800 22,405.8 15.3 13.5 1.4 1.0 5.2 5.0 3.6 3.2 4.7 4.8

XL Axiata EXCL IJ IDR 5,600 4,913.5 16.6 14.0 -28.2 0.7 6.0 5.3 2.8 2.5 2.4 2.9

Indosat ISAT IJ IDR 6,400 3,578.8 28.3 36.0 -1.1 -1.7 4.9 4.7 1.7 1.6 0.3 0.6

Thailand

ADVANC ADVANC TB THB 228.00 23,354.5 18.1 16.0 2.6 1.2 10.6 9.4 14.3 13.6 5.5 6.2

DTAC DTAC TB THB 93.00 7,586.8 20.1 16.1 -8.8 0.7 8.7 7.4 7.6 7.0 4.5 5.6

Simple Avg. - Malaysia Telcos 21.8 20.3 0.6 6.4 10.3 9.5 31.1 31.3 3.6 3.8

Simple Avg. - Singapore Telcos 18.4 16.4 2.0 3.1 9.8 9.0 4.7 4.1 4.7 4.6

Simple Avg. - Indonesia Telcos 20.1 21.1 -9.3 0.0 5.4 5.0 2.7 2.4 2.5 2.8

Simple Avg. - Thailand Telcos 19.1 16.1 -3.1 0.9 9.6 8.4 11.0 10.3 5.0 5.9

Simple Avg. - Regional Telcos 20.2 19.0 -1.9 3.3 8.9 8.2 16.3 16.0 3.8 4.1

P/E (x) PEG (x) EV/EBITDA (x) P/BV (x) DY (%)

Source: RHBRI, Bloomberg

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RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months

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Take Profit: Target price has been attained. Look to accumulate at lower levels

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