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20-Apr-2017 16:30
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April SINGAPORE (April 5): The Info-communications Media Development Authority (IMDA) on Tuesday announced the winning bidders in the first stage of the General Spectrum Auction (GSA) for Singapore telcos. But there were more losers than winners as a result of the bidding war, according to analysts. The final spectrum prices were shockingly high, says CIMB Research analyst Foong Choong Chen in a Wednesday report. The telco spectrum sale raised a total of $1.145 billion from all four bidders. Singapore Telecommunications (Singtel) won the maximum allowed 75MHz of spectrum for $563.7 million StarHub won 60MHz for $349.6 million M1 won 30MHz for $208 million while TPG Telecom won 10MHz of spectrum for $23.8 million. (See: Telco spectrum sale raises $1.1 bil from all four bidders) But aggressive bidding saw the final spectrum prices for the 700MHz and 900MHz bands overshoot their reserve prices by 4.7x and 6.6x, respectively. These huge premiums will have negative repercussions for StarHub and M1 even with conservative payment schedules,? says Maybank Kim Eng Research analyst Gregory Yap in a Wednesday report. ?Both will need to lower their dividends to keep gearing levels within what we deem to be comfort zones for them,? he adds. ?By our estimates, M1 and StarHub will have to cut FY18E-FY19E dividends by 13-38%, leading to pedestrian yields in the low-3%.? According to RHB Research Institute Singapore, M1 is expected to be hit hardest from the GSA bidding war. ?M1?s net debt/EBITDA stands to be the most impacted, with FY17 net debt/EBITDA set to rise to 1.76x from 1.1x,? says RHB?s Singapore research team in a Wednesday report. ?We estimate that the impact on M1?s target price to be the greatest, potentially knocking off 11.2% |
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