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A US$130b manager sells Singtel as competition intensifies

Friday, April 28, 2017 - 13:12

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Rising competition in Singapore Telecommunications' key markets across Asia has prompted Henderson Global Investors to sell the stock.

[SINGAPORE] Rising competition in Singapore Telecommunications's key markets across Asia has prompted one of the world's biggest independent money managers to sell the stock.

Henderson Global Investors, which oversees about US$130 billion globally, sold its Singtel holdings in Asia-based portfolios last month, said Sat Duhra, who manages Asian dividend-focused investments for Henderson.

Singtel's key markets are growing more crowded as Australian carrier TPG Telecom steps up its regional expansion, Mr Duhra said.

"If you look at Singtel, Singapore's going to have more competition, Australia's going to have more competition, India's going to have more competition," Mr Duhra said in an interview. "It's going to face some short-term pressure."

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While Southeast Asia's largest listed company by market value still has buy ratings from almost two-thirds of the analysts who cover it, the stock has dropped 4.3 per cent since April 4 after the carrier's spending on a Singapore spectrum auction exceeded estimates and TPG announced plans to build a cellular network in Australia a week later.

Singtel will probably report a decline in annual operating profit for the fifth consecutive year next month, according to the average of 12 estimates compiled by Bloomberg.

"Singtel is not new to competition. We compete as an incumbent here in Singapore and as a strong number two in our other key market in Australia," a company spokesperson said in response to questions from Bloomberg News. "Our business is built on continuous investments in innovation and technology and offering the best services at the best prices that suit the changing lifestyles of our customers."

Singtel owns Optus, the second-largest telecommunications company in Australia, and also has stakes in Advanced Info Service Pcl and Intouch Holdings Pcl in Thailand; Bharti Airtel in India; Globe Telecom Inc in the Philippines; and Telekomunikasi Selular PT in Indonesia, according to a company report.

Aside from Indonesia, most of Singtel's regional businesses aren't very attractive, Mr Duhra said.

"We've been decreasing our telecom exposure across the region," he said. "Singtel's one of the last holdings we addressed, and we just don't feel it's a good place to be right now."

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