By Andrew Nelson
The iPhone5 officially came out last Friday and leading into the release brokers jockeyed for position to judge the impact the event might have on the Australian telco space. However, it seems with the latest iPhone launch that the buzz, at least in the lead up, seems to be outstripping the industry impact.
Analysts at Goldman Sachs on the morning of the launch noted that as yet, telco pricing activity has been fairly subdued compared to prior iPhone launches. Telstra (TLS) plans remain pretty much unchanged, with the only noticeable alteration to its offering being a free extra 1GB of data on $80 plans and above.
Optus ((SGT)) is also pretty much unchanged and continues to offer slightly better value, thinks GS, while Vodafone ((HTA)) has actually lifted its price by $1 and reduced data allowances on its cheaper plans. While the broker notes the company still seems to be offering the most bang for your buck, it is no longer the clear price leader it once was.
The broker notes that Telstra and Optus have been reporting strong pre-sales, with both having sold out during the week. Vodafone was still taking pre-orders at the end of the week, although the broker points out that pre-order stock has been prioritised to existing customers.
All in all, Goldman’s sees Telstra as the clear winner, with the phone’s LTE 1800 functionality pushing users to the existing 4G networks of Telstra and Optus. Meanwhile, Vodafone sits on the sidelines wishing its own 4G rollout was rolled out already.
Meanwhile, Credit Suisse notes iPhone5 pricing has not had a tangible impact on mobile handset subsidies in the $60–$100 plan range. The broker notes this development stands in stark contrast to the iPhone4S launch 12 months back, where handset subsidies increased 17%–45% on the most popular $60pm plans.
Optus has toyed with pricing a little, increasing handset subsidies on its $30, $35 and $50pm plans to match Vodafone. This should prove to be an easy win for Optus, thinks the broker, as it will be the only Telco with a 4G network offering such a low entry level price. Telstra’s plans start at $60pm.
Much like Goldman Sachs, Credit Suisse sees this latest launch as a win for Telstra and Optus and the clear benefit of having 4G up and running right when the market wanted it most. CS sees Australia quickly becoming a two-player market given Vodafone will not launch its 4G network until 2013. The broker further sees Telstra as being the best positioned of the lot given its greater 4G coverage. Yet while the lower subsidy levels might be a bit of a bonus, the broker thinks Telstra will actually post a bigger win with some unexpected subscriber growth.
Next, analysts at UBS are starting to see a clear shift in Australian equities towards the cyclical/reflation trade, expecting the reflation trade to extend towards the end of the year. The broker also notes that valuations are looking pretty cheap, which also tends to a shift money away from safety and defensives.
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