Cementing 5G Coverage In Singapore And Australia

There are green shots in terms of 5G uplift in Singapore and Australia as recent wins of additional spectrum will help drive the consumer business. Elsewhere, management is on track to achieve 170MW of data centre assets in the region (worth S$7-8b). A 30MW integrated cable landing station and data centre is underway in Singapore as Singtel seeks financing options while the Thailand-Indonesia partnership remains in active discussions. Maintain BUY. Target price: S$2.75.

WHAT’S NEW

Cementing 5G coverage in Singapore… Singtel and Antina (M1-StarHub consortium) have each been provisionally awarded 25MHz of the 2.1GHz spectrum, while TPG Telecom (TPG) obtained 10MHz. We believe this is a complementary spectrum for incumbent Singtel and Antina and there is little risk of TPG as the third 5G player in Singapore. This is because TPG is handicapped by the absence of 3.5GHz spectrum and the ARPU uplift might not ‘fit’ its customer value proposition.

…with encouraging take-up for 5G bundled services… We gathered that Singtel currently have more than 1,000 standalone 5G sites across Singapore and Singtel is on track to meet Infocomm Media Development Authority’s (IMDA) target of 50% population coverage by end- 2022. Singtel also notes encouraging 5G adoption via bundled packages. This has led to ARPU uplift (for 5G bundles) and helped address dilution from 4G SIM-only plans. To recap, Singtel’s postpaid ARPU in 1HFY22 have stablised at S$28/month thanks to encouraging 5G bundled take-ups.

…and ARPU uplift in Australia. Additionally, Optus obtained a 900MHz spectrum band to boost its 5G coverage. This 900MHz band is a low band that carries signals further than high bands; hence fewer base stations are required. This benefits Optus as there will be lower capex needed but it provides superior in-building coverage. We expect Optus to continue its growth trajectory in the mobile space into 2HFY22. To recap, 1HFY22 mobile service revenue rose 10% yoy as a result of higher penetration of Optus Choice plans – which seem to be able to sustain market share and gain traction among customers. Consequently,
there was a 12% yoy increase in 1HFY22 ARPU for Optus postpaid to A$40/month (stable qoq) and net add of 34,000 postpaid subscribers.