SingTel Investor Day: March 15, 2013

Short highlights from the SingTel Investor Day, March 15, 2013.

• Group Consumer (Singapore, Australia): Optus to launch TD-LTE in 2300 band 13H1 (slide 9).
• Group Enterprise: Market overview (slide 4), growth areas (slide 16).
• Consumer Singapore: Doubling the price for excess data usage April 2013 (slide 3) to 10.70 SID/GB (EUR 6.75). [Not quite as cheap as T-Mobile USA's new rate.] Interesting picture of cost per MB for both 3G and 4G coming down with rising traffic (slide 5). "Challenge: Customers are substituting roaming voice and SMS with data, using ‘free’ OTT services and Wifi. Solution: Partner international operators to offer data roaming packages - Launched roaming packages with partners for a fixed fee eg. Daily unlimited data roaming in UK with Telefonica at S$30/day"
• Group Digital L!fe: Clear picture of the telco role versus partner roles (slide 4). Acquisitions (slides 20, 24, 32, 36).
• AIS (Thailand).
• Bharti Airtel (India, Bangladesh, Sri Lanka and 17 African countries).
• Consumer Australia (Optus).
• Globe (Philippines).
• Telkomsel (Indonesia).

Tele2 sells Tele2 Russia

Highlights from this transaction, which didn't come unexpectedly after the company wasn't able to secure a 3G or 4G license (hence no data). In 12Q4, Russia was the largest contributor to the Group's revenue with 30%. Next to be sold Croatia?

There is a different reason why the sale is no big surprise. Less than two months ago Jere Calmes was appointed CEO of Tele2 Russia. His LinkedIn profile states that in 2012 he briefly was MD of Fast Lane Ventures in Moscow, while being a board member at Tele2. VTB, to which Tele2 Russia is sold, is a strategic partner of Fast Lane Ventures. Kinnevik is also a Fast Lane partner.

Details:

• Tele2 Russia: 22.7m subs; 3500 employees; rev 2012 SEK 13.0 bn, EBITDA SEK 4.7 bn.
• Sells Tele2 Russia to VTB Group, for $2.4bn (SEK 15.6 bn) in equity value + $1.15 bn (SEK 7.5 bn) in net debt, equivalent to 4.9x EBITDA 2012; capital gain SEK 15.6 bn.
• Plans capital distribution SEK 12.5 bn = 28 SEK/share via share redemption.
• Core markets are now Sweden, Norway, NL, Kazakhstan.
• New guidance (first time on Group level): rev CAGR 2013-2015: 5-7% to SEK 35.6 bn; EBITDA CAGR 2013-2015: 10-12% to SEK 8.3 bn; ROCE minimum 20% per country (was 24%); target net debt/EBITDA 1.25-1.75; div 2012 remains SEK 7.10.
• Opportunities to co-build in NL.
• Motto: "Tele2 - a European mobile operator - Mobile is our strategy"

Cisco VNI: highlights

Besides findings such as 'Global mobile data traffic grew 70 percent in 2012', the most recent Cisco VNI report (Feb. 6, 2013) contains other interesting material (the picture is a heatmap, showing where and when LTE will be deployed).

• Mobile data traffic growth in S Korea, China, Japan was ~100% in 2012, versus ~40% for Australia and Italy. Telefonica's and Vodafone's blended growth was ~35%. Cisco provides three answers why growth was lower in some regions: migration from unlimited to tiered data plans; a slowdown in laptop growth; increased offload to fixed via WiFi.

• Cisco also provides promoters of growth in usage: increased speeds; a shift to video; migration from fixed to mobile (where usage is higher) as a result of prices converging; increased tie spent (again, because mobile has higher usage).

• "Cloud applications (such as Netflix, YouTube) allow mobile users to overcome the memory capacity and porcessing power limitations of mobile devices."

• "Mobile offload is set to increase from 33% of total global mobile data traffic in 2012 to 46% in 2017."

• "The growth in 4G with it benefits of higher bandwidth, lower latency and increased security will help the regions bridge the gap between their mobile and fixed network performance leading to even higher adoption of mobile technologies".

• "Currently, a 4G connection generates 19 times more traffic than a non-4G connection. There are two reasons for this. The first is that many of the 4G connections today are for residential broadband routers and laptops, which have a higher average usage. The second is that higher speeds encourage the adoption and usage of high bandwidth applications, so that a smartphone on a 4G network is likely to generate 50 percent more traffic than the same model smartphone on a 3G or 3.5G network. As smartphones come to represent a larger share of 4G connections, the gap between the average traffic of 4G devices and non-4G devices will narrow, but in 2017 a 4G connection will still generate 8 times more traffic than a non-4G connection."

• "From 2011 to 2012, average usage per device on a tiered plan grew from 425 MB per month to 922 MB per month, a rate of 117 percent, while usage per device of unlimited plans grew at a slower rate of 71 percent from a higher base of 738 MB per month to 1.3 GB per month." (Based on a study of 2 global tier 1 carriers, looking at 22k devices over 12 months.)

• "Tiered pricing plans are often designed to constrain the heaviest mobile data users, especially the top 1 percent of mobile data consumers. An examination of heavy mobile data users reveals that the top 1 percent of mobile users is actually the top 5 percent, because the top 1 percent of users varies each month."

• "The proportion of mobile users generating more than 2 gigabytes per month has increased significantly over the past year, reaching 18 percent of users towards the end of 2012."

• "in comparing data consumption over Wi-Fi and cellular networks, the global average for daily data consumption over Wi-Fi is four times that of cellular, averaging 55 MB per day for Wi-Fi, and 13 MB for cellular. For end-users, selecting Wi-Fi over cellular for the majority of their data consumption is an important consideration for staying within the limits of their cellular data plans."

• "in comparing data consumption over Wi-Fi and cellular networks, the global average for daily data consumption over Wi-Fi is four times that of cellular, averaging 55 MB per day for Wi-Fi, and 13 MB for cellular. For end-users, selecting Wi-Fi over cellular for the majority of their data consumption is an important consideration for staying within the limits of their cellular data plans."