Special Report: 3rd Telco Play Analysis, with Target Prices for GLO and TEL (Feb 2018)

PinoyInvestor’s Special Reports cover our partner brokers’ expert analysis on a range of topics affecting the stock market. These may include economic updates, sector analyses, upcoming IPOs, and more! Learn how you can use this report in the PinoyInvestor guide.

 

NOTE: This Premium Special Report is available this week for FREE. Do you want to receive other FREE stock reports? Simply register here today. Or get 1-Year Premium Access for only PHP 399 a month! Sign up now!

 

Our Partner Broker’s Analysis

Welcoming the entry of the third operator

The third operator is anticipated to enter the market by the 1st Quarter 2018, heavily supported by the government. According to the Department of Information and Communications Technology (DICT) the timeframe for the selection process of the new telco operator is scheduled on February 19, 2018 and bidding will be until March 2018.

Recently, PLDT surrendered the frequencies of Connectivity Unlimited Resources Enterprise (CURE) without monetary compensation from the government, indicating cautious optimism on the nearing competition. Incumbents’ initiatives to densify network services may shoot up debt level. With the anticipated tightening of competition, both telco giants raised CAPEX spending for this year.

However, looking at the interest-bearing debt-to-equity ratios may shoot up if CAPEX is funded by additional debt. We note that as of 2017, both companies are still within their debt covenants.

 

Our Partner Broker’s Recommendation

We assumed the new player to gradually acquire 10% of the total wireless subscriber market share in the next five years. We think that GLO will be more affected since it is currently the leader in the said segment.

Maintain Buy rating on TEL and Hold rating on GLO. We believe TEL is poised to capitalize on the postpaid segment. For GLO, we project further improvement in ARPU, but maintain our rating as current price limits Target Price upside.

 

Summary of Recommendations and Target Prices:

PLDT (TEL) – Buy, Target Price of PHP 1,787.00

Globe Telecom (GLO) – Hold, Target Price of PHP 2,030.00

Other Related Stock Analyses and Recommendations

Special Report: Banking Sector Outlook, with Target Prices for MBT, SECB, BPI, BDO (Feb 2018)

Here are 10 stocks owned by Top Investment Funds in the Philippines in 2018

Special Report: PSE Stock Market Outlook (February 2018)

 

This report is prepared by PinoyInvestor’s partner broker below. Sign up to this stock broker to avail of their complete trading brokerage services:

Unicapital Securities
Unicapital Securities

Unicapital Securities is one of PinoyInvestor’s partners in delivering superior and reliable stock research reports that help Filipino investors make smart stock investing decisions! Learn more about them here.