汇丰银行：全球电信行业研究报告2008年2月

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收藏 2009-01-27

Expect decoupling: of growth, of cash flow, of M&amp;A. This phenomenon is set to be dramatic in a broad macro context, but we also expect a telecoms-specific decoupling to take place. In particular, we anticipate that the superior growth of GEM and GEM-exposed operators will be far more prolonged than expected by consensus. Sustained revenue growth, high margins and moderating capex should combine to double GEM FCF by 2010e, in our opinion. This could in turn have a dramatic impact on the industry’s landscape. Previously, GEM operations have largely been M&amp;A targets for developed market acquirers, but GEM players are now beginning to acquire one another. In future, fuelled by their superior growth, they could begin to pursue developed market operators – reversing the established trend in the direction of M&amp;A.Telecoms decoupling We think of the telecoms operators as falling into three regional groupings: global emerging markets (GEMs), Western European (WE) and the rest of the world (RoW, ie US/Japan), and we then sub-divide WE between those operators with high (&gt;20% of sales) and low GEM exposure. We anticipate a revenue CAGR 2007-10e of c5% across the entire industry, with GEM operators doing best while WE companies with high GEM exposure should post average growth; however, WE operators with little GEM exposure and RoW stocks should deliver under-average growth. Admittedly, not all GEM operators are high growth, but enough are to give the GEM stocks in aggregate a double-digit growth rate, with their mobile activities being the key driver. Superior GEM growth is supported by the macroeconomic divergence evident at present. HSBC forecasts 5.8% nominal global GDP growth for 2008 (real 2.9%), with GEM growth more than three times that of developed markets (real and nominal). Nominal GDP drives constant currency growth (a frequently cited measure), while real GDP is obviously the more revealing figure if currencies drift to maintain real exchange rates. As there is a vast gulf between developed and GEM growth, the question is sustainability. While GEM growth has become less sensitive to the US, perfect decoupling stretches credulity, in our view. Nonetheless, we suspect that the major GEM economic risk is more likely to be inflation than real GDP growth. Within GEMs, 2008e growth is fastest in emerging Asia, at 13.1% nominal, 8.3% real, driven by China and India. Emerging Europe follows close behind, with growth of 13.9% nominal, but 5.9% real, led by Russia and Turkey. Middle East and Africa growth is also double digit, at 11.7% nominal, 5.7% real – being especially rapid in the UAE and Egypt. Even LatAm is 9.3%, 4.4 % real, with Brazil and Argentina strongNaturally, investors may be wary of the risks associated with the better growth provided by emerging market; however, we would point out that it is, of late, developed-market risks that have come to the fore. We do not suggest that emerging markets should be seen as lower risk than developed, just that at present, the risk-reward balance is unusually skewed away from developed markets and towards GEM. Moving beyond macro factors to telecom specifics, we would emphasise the upside in GEM mobile. We believe that consensus mobile forecasts are too conservative, as they are based on key performance indicators (KPIs) that we see as profoundly flawed. Markets are often deemed saturated when the number of accounts comes close to that of the total population – ignoring the fact that many users have more than one account. For this reason, reported penetration routinely exceeds market expectations. Equally misunderstood are ARPU trends. ARPU purports to be spending per user, but actually only measures spending per account – and so is extremely misleading when the number of accounts per user is rising (as it is almost everywhere). The proliferation of multiple accounts per user dilutes ARPU growth, often making it appear negative (since a customers’ spending is spread over more accounts). However, the reality is that the trends measured per person (ie irrespective of how many accounts they have) are much stronger. The same distortion in minutes of use (MoU) per account trends means that volume growth is being underestimated, and, as a result, so is elasticity. Our global mobile revenue estimates are an encouraging 8% CAGR 2008-10e, 2ppt faster than nominal GDP. In other words, we expect mobile to remain a growth industry. However, if we ignored the fact that headline penetration is being overstated (and hence projected saturation sooner) and also overlooked the multi-account dilution of ARPU growth, then our mobile forecasts would show just a 4-6% CAGR, slower than nominal GDP – indicating mobile was no longer a growth sector. As it is, we think consensus forecasts will have to rise. Note that all markets harbour distortions in the KPIs outlined above, but these are greatest in GEMs and WE. But while we are generally positive about GEM wireless, we are cautious about GEM wireline – in part because more sustained mobile growth implies more fixed-to-mobile substitution. Wireline’s natural defence in developed markets is to sell services wireless finds hard to replicate, like broadband and IPTV. However, the gap in fixed-line network capabilities between developed markets and GEMs is generally much greater than the equivalent gap in mobile. Most GEM fixed-line operators are very far from being able to offer widespread broadband or IPTV deployment. Hence, although more mobile usage may be incremental (if users never had fixed-line), there is a greater substitution impact on what little fixed-line there is in emerging markets.It is worthwhile noting the disappointing performance reported recently by fixed-line GEM players as diverse as China Netcom MTNL (India), Magyar Telecom (Hungary) and Telesp (Brazil). However, with GEM mobile operations significantly outweighing fixed-line, we are bullish about overall revenue prospects. Secondly, we are also upbeat about GEM FCF, forecasting that it will in aggregate double 2007-10e. While WE stocks with high GEM exposure should deliver respectable FCF growth, we forecast WE stocks with low GEM revenues will produce only flat FCF, although RoW FCF should do better thanks to moderating capex. The key to GEM FCF growth is the combination of top line growth and stable margins diluting the currently high levels of capex intensity. Most GEM telecoms operators achieve higher margins than their developed-market peers, with some of the reasons for this being cross-sectoral (eg GEMs require higher returns to compensate for higher risks), while others are sector-specific (eg limited liberalisation). Over the long term, we would anticipate a degree of convergence between GEM and developed markets – and note that HSBC’s valuation methodology forecasts no abnormal long-term returns, and hence assumes that ROIC ultimately converges to local WACC in all markets. However, we would also stress some factors that could underpin superior long-term GEM margins: for instance, the later (and, hence, cheaper) implementation of new technologies. Additionally, it is worth observing that CEE incumbents (unlike their WE peers) have sustained their EBITDA margins since liberalisation, and that, even at equivalent levels of competition, GEM operators deliver better margins (assisted by lower handset subsidies and cheaper labour). Less positive for FCF generation is the fact that many GEM operations have high capex/sales ratios while they roll out national coverage. We expect GEM capex will rise further, but more slowly than should revenues. GEM telecoms operators also tend to have lower gearing than their developed-market peers, despite funding network rollout, as they largely avoided the M&amp;A and licence fees of the bubble era, hence their FCF should rapidly erode their limited debts. Meanwhile, GEM tax expenses will obviously increase, the aggregate effective tax rate should fall towards the relatively low rates of corporate tax that are prevalent in GEMs. Bringing all this together, we forecast GEM telecoms FCF to double 2007-10e. Finally, we must consider how this prodigious FCF will be used, with one obvious option being deal making. In the early days of sector cross-border M&amp;A, developed market operators focused on developed targets, but from the 1990s they also sought growth in GEMs, as the latter began to liberalise. Initially, there was little competition for GEM operations – but more recently many GEM players have become strong enough to expand regionally, and are bidding in competition with developed-market peers. Indeed, now that some GEM telecoms companies are amongst the world’s largest, and are enjoying dramatically improved FCF, we expect a final step in which they are able to developed-market players. Of course, this potential change in M&amp;A flow direction is not unique to telecoms: we have seen it in industries as diverse as steel, IT services and cement. The incentives for GEM operators to consider M&amp;A in developed markets are various: including the desire to obtain technology experience, the benefits of financial engineering (especially given the high FCF yield of many targets), and the potential to exploit the benefits of ultra-low cost GEM techniques in developed markets. The case against acquiring in developed markets is that such purchases tend to offer lower growth and can be politically difficult (especially for GEM acquirers, as the contest for Telecom Italia has recently shown). But overall it seems likely to us that, as GEM operators continue to grow in terms of market capitalisation, FCF and confidence, they should be better able to acquire in developed markets; and as they expand their GEM footprints, they may find GEM opportunities becoming progressively thinner. Both factors point towards a new direction for M&amp;A, with the emergence of GEM-into-developed market deals.