Singtel acquisitions neutral in the near term

SINGAPORE (Aug 19): Maybank Kim Eng and RHB Research are downgrading Singapore Telecommunications (Singtel) to a “hold” while CIMB is maintaining its “add”. This comes after the telco announced it would be acquiring stakes in Intouch Holdings and Bharti Telecom for $2.47 billion.

In a Friday note, Maybank Kim Eng’s analyst Gregory Yap questions the timing of the acquisitions as AIS would be paying for its spectrum over the next few years which would impact its dividend payout and Airtel faces a new competitor and a potential price war.

Still, Yap says “Temasek does not appear to be short-changing Singtel”, observing that the issue price of new Singtel shares is close to the peak, and the value of the increased stakes in AIS and Airtel are close to the fair value estimates of analysts.

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