OREANDA-NEWS. From gestures to language to circuits, the electronic evolution of communication has played a key role in shaping the modern day Telecommunications Sector.  Across Asia-Pacific, the Telecommunications Services sector is made up of some 150 primary-listed stocks with a combined market capitalisation of S\$1.4 trillion. ASEAN Telecommunication Services stocks account for one-fifth of that market capitalisation, with its five largest stocks each representing a Singapore, Indonesia, Thailand, Malaysia and Philippines play. This is according to the Global Industry Classification Standard (GICS®).

The average annualised return of Telecommunications stocks across ASEAN was 8.1% over the three years ending with 2014. In Singapore, the trio of Singtel, Starhub and M1 averaged a 17.0% annualised return over the same period.

Beyond those three stocks, Singapore lists another two Telecommunication Services stocks that maintain a market capitalisation above S\$200 million.  These two stocks - euNetworks Group and Polaris are listed on Catalist which provides an avenue for fast-growing enterprises that seek to raise funds from the capital market. Currently, there are 155 stocks listed for trading on Catalist with S\$345 million of funds raised on Catalist through Initial Public Offerings and Reverse Takeovers last year.

Recent premium offered on shares of euNetworks Group

On 16 October 2014, euNetworks Group noted that it was in discussions with a substantial shareholder of the company and various third parties in relation to a possible transaction involving the shares in the company. Prior to the announcement, shares in euNetworks were trading at S\$0.65.

Then on 17 November 2014, a mandatory unconditional cash offer by EUN Holdings, LLP to acquire all the issued ordinary shares in the capital of euNetworks Group at a price of S\$1.16 was announced. This represented a 32.5% premium to the 14 November close price of S\$0.875. Since the end of November 2014, the shares of euNetworks Group have mostly traded at S\$1.16.

The five largest capitalised stocks of the sector - Singapore Telecommunications, Starhub, M1, euNetworks Group and Polaris, generated an average 2014 total return of 13.6%.  In the year thus far, they have averaged a 0.7% decline.

The table below details these telecommunications stocks.

Five Largest Telecommunication Stocks according to GICS SGX Code Mkt Cap S\$M Total Return 2014 % Px Chg Pct YTD % Dvd Ind Yld % GICS SubInd Name
SINGAPORE TELECOMMUNICATIONS Z74 62180.0 11.3 -0.3 4.3 Integrated Telecommunication Services
STARHUB LTD CC3 7087.6 1.5 -1.7 4.9 Wireless Telecommunication Services
M1 B2F 3306.2 17.4 -1.4 3.9 Wireless Telecommunication Services
EUNETWORKS GROUP 5VT 507.5 43.2 0.0 N/A Alternative Carriers
POLARIS 5BI 307.0 -5.6 0.0 N/A Alternative Carriers

Source: Bloomberg (Data as of 13 January 2015)

Singapore Telecommunications

Singapore Telecommunications Limited provides multimedia and infocomm technology (ICT) solutions in Singapore and Australia. It offers facilities management, consultancy, information technology, Internet access, and pay television services; technical, business, and management consultancy services; and distributes telecommunications and data communication products. Singapore Telecommunications has the highest market capitalization of S\$62,180 million and the stock generated  2014 total return of 11.3%. On 13 November 2014, the company reported that their revenue for the half year ended 30 September increased by 0.01% to S\$8,457.0 million. The stock went ex-dividend on 19 December 2014, distributing S\$0.068 per share in dividends.

Starhub

StarHub Ltd, an integrated info-communications company, provides a range of information, communications, and entertainment services for consumer and corporate markets in Singapore. The company's personal solutions comprise mobile services, wireless broadband services, and IDD services. Starhub has a market capitalization of S\$7,087.6 million and the stock generated a 2014 total return of 1.5%. On 5 November 2014, the company reported that their revenue for the third quarter period ended 30 September increased by 2.3% to S\$592.0 million. The stock went ex-dividend on 11 November 2014, distributing S\$0.05 per share in dividends.

M1

M1 Limited, an investment holding company, provides mobile and fixed communications services in Singapore. It offers a range of voice, data, and value-added services on 4G, 3G/high speed packet access, and 2G networks; and wireless broadband services. M1 has a market capitalization of S\$3,306.2 million and the stock generated a 2014 total return of 17.4%. On 16 October 2014, the company reported that their revenue for the third quarter period ended 30 September increased by 3.5% to S\$250.2 million. The stock went ex-dividend on 6 August 2014, distributing S\$0.07 per share in dividends.

euNetworks Group

euNetworks Group Limited, an investment holding company, operates as a bandwidth infrastructure provider primarily in Europe. It operates in two segments, Network Business and Colocation Business. The company operates fibre networks; and provides communications infrastructure and networking solutions and services to corporate companies, carriers, and service providers. euNetworks has a market capitalization of S\$507.5 million and the stock generated the highest 2014 total return of 43.2%. On 7 November 2014, the company reported that their revenue for the third quarter period ended 30 September increased by 6.6% to €25.7 million.

Details of the a mandatory unconditional cash offer by EUN Holdings, LLP to acquire all the issued ordinary shares in the capital of euNetworks Group are provided above.

Polaris

Polaris Ltd., an investment holding company, is engaged in the distribution and retail of mobile phones, consumer electronics, and related services and accessories in Hong Kong, Singapore, and Myanmar. It sells consumer electronics products, such as computers and laptops, as well as provides broadband and other related telecommunication services. Polaris has a market capitalization of S\$307.0 million and the stock generated a 2014 total return of -5.6%.

On 13 August, the company reported that their revenue for the half year ended 30 June 2014, increased by 61.9% to S\$62.5 million.

Telecommunications Sector

According to GICS®, the Telecommunication Services Sector contains companies that provide communications services primarily through a fixed-line, cellular or wireless, high bandwidth and/or fibre optic cable network.

In terms of relative price performance of the various sectors, the telecommunications sector was the second best performing index in July and the least performing sector in February last year.