Company Name: SINGTEL
| Research House: DBS Vickers | Price Call: HOLD | Target Price: 3.29 |
DBS Vickers has downgraded Singapore Telecommunications to 'hold' from 'buy' and cut its target price to $3.29 from $3.32, on concerns of intensifying competition in India, a weak rupee and its growth in Singapore.
By 10:51 a.m., SingTel shares were 1.2% lower at $3.26, and have gained about 5.5% so far this year, underperforming the benchmark Straits Times Index’s 9% rise.
DBS said its checks suggest that tariffs in India have been falling rapidly since May, indicating greater competition in the country, while SingTel’s affiliate Bharti Airtel has been losing revenue share to competitors such as Vodafone.
The Indian rupee has declined 20 % against the Singapore dollar over the last three months, which could result in significant foreign exchange losses at Bharti as it has large US dollar-denominated foreign debt, DBS said.
Singapore regulator Infocomm Development Authority's upcoming initiative to spur adoption of fibre network, Inter Connect Offer, could dampen SingTel’s earnings in Singapore, DBS said.
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