by winston » Mon Dec 19, 2011 1:50 pm
not vested
Indian headwinds
Over the weekend, it was reported that the Central Bureau of Investigation in India, is investigating SingTel over allegedly providing international long distance services to its customers in India, without a domestic telecom licence.
Though the services were provided between 2004 and 2009 via two local companies, Bharti Airtel (in which SingTel has a 32.3% stake) and Tata Communications, the authorities are only now questioning the legality of the transactions.
SingTel appears to be increasingly caught in the growing political turmoil surrounding the Indian telecommunications industry.
It should be noted that this is not new news as it was first mentioned to investors by SingTel more than a year ago and the company is not the only foreign telco involved in the investigation.
Our update today on SingTel, highlights the growing risks it faces in India, specifically with respect to currency and regulatory risks.
Although we still like SingTel for the overall defensiveness of its earnings and dividends relative to the rest of the market, we prefer StarHub (7% FY12F dividend yield) at this point given the rising risk profile of SingTel in India, which accounts for about 16% of its FY Mar12F pretax profit.
M1 (6.5% FY12F dividend yield) has also underperformed relative to the other two telcos this year.
Source: Kim Eng
It's all about "how much you made when you were right" & "how little you lost when you were wrong"