This is a short update of share price performance, following my piece from January calling for continued weakness in M1 and Starhub due to the entry of a fourth mobile operator (TPG).
As can be seen on the screenshot, total return performance (including paid out dividends) on both M1 and Starhub has been weak (at -9% and -5.5%), clearly underperforming Singtel (~flat) and the broader market (+11%).
Both telcos have largely recognized the weakening operational environment by cutting dividends. M1 has paid out 11.1 cents in 2017 (vs 15.3 in 2016 and 21.2 in 2014), while Starhub has lowered the quarterly pay out by 20% (from 5 cents to 4 cents). These dividend reductions leave yields at 6% and 6.2% respectively.
These operators face continued pricing pressure, while TPG hasn’t started marketing yet. In the meanwhile, unlimited data plans have are making inroads into the Singapore mobile market, with great benefit to the consumers and the broader Smart Nation objectives, while at the expense of shareholders.