A full service telecom company in Singapore

Tuas is a spin-off (operating under the Simba brand).
It represents the Singaporean activities of TPG Telecom which was kept by D. Theo.

Main shareholders of Tuas :
- D. Theo and Vicky Theo : 37 %
- Washington H Soul : 25 %
- Wilson Asset Management : 5.1 %

It has now a clear objective to become a full service telecom operator in Singapore via :
- mobile activity,
- broadband,
- and later on, the launch of a business and enterprise service.

Mobile activity
4th mobile operator in Singapore with around 8 % market share.
It has built its own infrastructure and offers super cheap plans (ARPU of 9.37 $ / month).
So far, it is a great success, as the company has a large increase of its number of subscribers (+ 40 %) which translates in a high leverage effect (FY 23 EBITDA of 31 m SGD vs 15.5 M SGD one year before).
Thanks to this, the company has just turned free cash flow positive in H2 23 (1 m SGD vs - 6.1 m SGD during H1 23).

Broadband
Tuas is expected to do a full launch of its broadband business at the end of H1 24.
Once again, it will be a low price service for their customers as they are expected to launch it at 20 SGD/month (vs 34/35 SGD / month for the incumbents, according to a recent note of R. Montgomery).

No doubt that their low price strategy may be of interest for its customers :
- as Singapore is a market really sensitive to promotions,
- telecom services are probably seen as indispensable for a large number of people, so they are probably happy to pay the lowest price possible for this recurring spending, while struggling with inflation.

Valuation
The stock does not look cheap with an EV/ FY 23 EBITDA of 28.5 x.
This is due to the fact that the company is high growth now in Singapore (+ 50 % for revenues and + 100 % for EBITDA).

Interesting also to compare with the past valuation of TPG Telecom (before Vodafone merger).
It was valued around 6.5 bn AUD*.
But this figure does not discount the size difference between the 2 markets. Based on the number of inhabitants, this past valuation of TPG would correspond to a valuation of around 1.4 bn AUD in Singapore.

We can also note that it is difficult to compare with the leader in Singapore (Singtel) which has a similar market cap than Telstra.
The main problem is that I estimate that only 27 % of Singtel earnings comes from Singapore.

* estimated valuation when TPG merged with Vodafone in 2020 (EV of 7.5 bn AUD and equity value of 5.5 bn AUD).