Australian Telecom Sector Update

Submitted by Craig Strzelecki on 23 April, 2007 - 18:17

Sharemarket analyst UBS has given an update for the Australian telecommunications sector: TEL outperforms: TEL outperformed reversing last weeks losses as structural separation gathers momentum. TLS performed inline but has outperformed by 4% since the ALP announced its FTTN plan on 22 March ($2.1bn value creation). SGT gave up gains despite Bharti rallying 7%. News flow: G-9 access undertaking, ACCC fixed-line review; G-9 lodged a draft FTTN access undertaking proposing prices of $21-24. ACCC announces Fixed Services Review with LSS pricing and exchange regulation in focus. TelstraClear abandons $50m Tauranga 3G plan. Coonan confirms ongoing talks with both TLS and G9 on FTTN. Optus will pursue legal action if a uncompetitive deal is struck between the LP and TLS. Offshore, KKR is linked to a Bell Canada bid. Catalysts: broadband politics, upcoming results, capital management; TEL: capital mgt, UMTS build? Opsep and Vodafone aggression. SingTel (SGT): FY07 results/FY08 guidance (May 9), capital mangement, renewed Optus aggression? Telecommunications giant of the sector: Telstra: potential broadband capex bubble could knock EPS momentum; fibre regulation is key (Federal Budget due 8 May). The analyst's stock preference: SGT over TLS, TLS over TEL; SGT is their top pick. A 25% Bharti price target upgrade (or c25c) yesterday has yet to be factored in. TLS premium appears sustainable but hinges on broadband politics. TEL trades at a premium but aggressive PWT synergies ($100mpa) & YPG capital management gains would imply it is fairly valued.

Download our FREE App

Signup for Free
Don't miss out on your free share trading articles.

Free Risk Money Management Calculator for those who sign up!