Rising Competition for Singtel Prompts Henderson to Sell

(Bloomberg) -- Rising competition in Singapore Telecommunications Ltd.'s key markets across Asia has prompted one of the world's biggest independent money managers to sell the stock.

Henderson Global Investors, which oversees about $130 billion globally, sold its Singtel holdings in Asia-based portfolios last month, said Sat Duhra, who manages Asian dividend-focused investments for Henderson. Singtel's key markets are growing more crowded as Australian carrier TPG Telecom Ltd. steps up its regional expansion, Duhra said.

“If you look at Singtel, Singapore's going to have more competition, Australia's going to have more competition, India's going to have more competition,” Duhra said in an interview. “It's going to face some short-term pressure.”

While Southeast Asia's largest listed company by market value still has buy ratings from almost two-thirds of the analysts who cover it, the stock dropped 4.3 percent since April 4 through yesterday after the carrier's spending on a Singapore spectrum auction exceeded estimates and TPG announced plans to build a cellular network in Australia a week later. Singtel will probably report a decline in annual operating profit for the fifth consecutive year next month, according to the average of 12 estimates compiled by Bloomberg.

Singtel shares fell 0.3 percent to S$3.74 at the close in Singapore.

“Singtel is not new to competition. We compete as an incumbent here in Singapore and as a strong number two in our other key market in Australia,” a company spokesperson said in response to a query about rising competition. “Our business is built on continuous investments in innovation and technology and offering the best services at the best prices that suit the changing lifestyles of our customers.”

Singtel owns Optus, the second-largest telecommunications company in Australia, and also has stakes in Advanced Info Service Pcl and Intouch Holdings Pcl in Thailand; Bharti Airtel Ltd. in India; Globe Telecom Inc. in the Philippines; and Telekomunikasi Selular PT in Indonesia, according to a company report. Aside from Indonesia, most of Singtel's regional businesses aren't very attractive, Duhra said.

“We've been decreasing our telecom exposure across the region,” he said. “Singtel's one of the last holdings we addressed, and we just don't feel it's a good place to be right now.”

To contact the reporter on this story: Livia Yap in Singapore at lyap14@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie, Sebastian Tong