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Why All Three Telecom Stocks Are Down In The Last Few Weeks

There are three main players in Singapore’s telecom industry. They are Singapore Telecommunications Limited (SGX: ZY4), M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3).

Each telecom company has a slightly different focus. For example, M1 and StarHub derive the bulk of their earnings in Singapore, whereas SingTel has customers outside of Singapore too. They include India, Thailand and Australia.

Yet, they all have one thing in common. In the past 30 days their stock prices are all down. Of the three, StarHub has lost the most. Its shares are  down by 17%, follow by M1 at 10% and finally SingTel at 7%.

There can be many reasons why a company’s share price may fall. Generally, it’s driven either by business performance or investor’s sentiment.

The former is related to how a business performs in a given period by looking at its growth, margins and productivity to name three. Here, the ultimate driver is profit.

The latter is driven more by investors’ moods. This can be driven by emotions such as greed and fear, optimism and pessimism, bullish and bearish sentiment.

Below is a quick summary of the latest quarterly results by the three companies, which were released in the last few weeks.

Latest quarterly result vs. same period last year:
Revenue Net profit EPS Outlook Read more
SingTel -2.3% -6.0% -5.6% Revised down Click here
StarHub -3.0% -27.6% -27.0% Revised down Click here
M1 -10.3% -23.4% -22.8% Revised down Click here

The weak business performances would have contributed significantly to the decline in share price.

Additionally, as the fourth telecom company is expected to join the industry soon, this may also have added to the selling pressure.

In the short run, a stock price can be driven by both business performance and investor sentiment.

But in the long term, it is the former that will eventually dictate the stock movements. After all, what we are seeking as investors is only one thing – profits!

Thus, profit should be our long term “signal”. The rest is just noise.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.