SINGAPORE TELECOMMUNICATIONS

SINGAPORE TELECOMMUNICATIONS | BUY

OCT 10 CLOSE: $3.14

TARGET PRICE: $3.94

UOB Kay Hian, Oct 10

Singtel has stepped up efforts to extract revenue synergies from Optus and its regional mobile associates.

Collaborations in mobile payments, gaming and e-sports also build stronger rapport with mobile customers, especially the millennials.

We view these initiatives positively because:

(a) They build "sticky" customer relationships.

(b) They are capex-light and do not involve expensive acquisitions.

(c) They enhance cohesiveness and collaborations across Singtel, Optus, Telkomsel, Bharti Airtel, AIS and Globe Telecom, leveraging on economies of scale with more than 700 million mobile subscribers across six countries.

With the mobile payment platform in place, Singtel's goal is to build a vibrant digital marketplace.

Customers can purchase and download games and e-sports. In the future, the platform could be expanded to distribute financial services, such as insurance and micro loans.

Our target price for Singtel is $3.94 based on discounted cash flow (required rate of return: 6.25 per cent, growth: 1.5 per cent).

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