Singtel’s 35%-owned Telkomsel has removed starter pack data bonuses and increased prices for regular top-up packages. Pricing for monthly data packages has increased 11% in July. Subsequently, competitor XL Axiata also increased pricing for selective packages in late September.
In India, Bharti Airtel's rival Reliance Jio reported a strong set of results for 2Q19. This was achieved via a huge net addition of 37 million subscribers driven by its Monsoon Hungama offer, which allows customers to trade-in any old phone for new JioPhone 1, the current top-selling feature phone in India.
JioPhone 1 is soon to make way for JioPhone 2 which has a 2.4-inch display and a full Qwerty keyboard. It went on sale on Aug 16 at the price of Rs2,999 ($57) and is already out of stock.
Meanwhile, Singtel subsidiary and programmatic advertising platform Amobee is facing headwinds. Revenue from digital marketing decreased 7.1% y-o-y in 1Q19 after Amobee was hit by a pullback in marketing spend by four to five major customers, explains Singtel management.
“We are concerned that Singtel may not be able to meet its guidance of mid-teens FY19 revenue growth for Amobee if the weakness in digital marketing persists,” says analyst Jonathan Koh.
UOB is forecasting Singtel to post a net profit of $747 million for 2Q19, down 19.7% y-o-y and 10.1% q-o-q.
“We expect Bharti to have incurred losses for the third consecutive quarter. The quarter is also hampered by weakness in the rupiah, which corrected 3.9% against the Singapore dollar in 2QFY19. We believe consensus estimate at $882 million is unlikely to be met,” adds Koh.
UOB has a target price of $3.94 based on DCF. Year to date, Singtel shares are down 12.2% to $3.16 or around 17.2 times FY19F earnings.
