11-03-2016, 02:21 PM
(11-03-2016, 10:00 AM)CY09 Wrote: [ -> ]Hi Cityfarmer,
You are right if the assumption made is that an average user consumes 3 gb to 4 gb worth of data. So lets use the current 4 GB SIM only plan as comparison.
What it means for incumbents is that from being able charge $30 for similar 4 GB SIM-only plans, they now are able to charge for only $20. ARPU has fallen. For Starhub and M1 a fall in ARPU by about 30% in mobile, may mean a fall in 15% of overall revenue given how much these 2 telecos have exposure to the mobile segment.
And given how tightly dividends may have to follow revenue/cashflow, I am really interested to see how M1 and Starhub will react to its dividend policy. All in all, I am expecting about a 15% slash in dividends in the medium Term. For starhub, which I monitor rather closely, I wonder how will they maintain their 20 cents dividend when: 1) Mobile makes up 50% of revenue, 2) 2022 bond is maturing and they have not prepared cash buffer.
M1 current yield of 15.3 cents may go lower to 13.5 cents. If so, what is the fair value of M1 in the new normalized teleco environment?
*M1 has about 60% tied to mobile revenue and 30% to handset sales which are tied to recontacting with normal plans instead of SIM-only plans as what we are now using as comparison.
As per my post in Starhub their dividend is highly tied to their operating cashflow. So I would expect their dividend to drop but I won't be worried about their debt. Both Starhub and M1 can repay their debt pretty fast if they just stop dividend
Happy debt holders but not sure about equity holders. I think 10% dividend cut for M1 and Starhub to save ~$20m and ~$35m is about right, and after ~30% fall at 6% yield share prices have adjusted accordingly. Now is the uncertainty discount from the 4th telco.