SINGAPORE (Nov 29): UBS remains bullish on Singapore Telecommunications with a “buy” call and a target price of S$4.70, citing Optus’ strength in the Australian market.

In a Monday report, lead analyst Navin Killa notes that a recent survey by UBS shows that Optus has shown the most improvement in net promoter scores (NPS), moving up from +10 to +15, among mobile providers.

There was also a drop in existing customers wanting to leave Optus from 21% to 19%, citing reasons such as network coverage (down from 27% to 23%), customer service (23% to 13%) and value for money (52% to 37%).

On the fixed broadband front, Optus had a mixed performance, with 28% of customers with serious intention to switch, but with a NPS of +12, only below TPM at +17.

“In our estimates we remain conservative on Optus broadband share gains, as management has highlighted that returns in NBN world are low and the company’s focus remains on bundling broadband with mobile and content, rather than targeting pure broadband subscribers,” says Navin.

Navin forecasts a DPS CAGR of 3.6% over FY16 to Fy19, driven by higher contribution from regional affiliates and Optus’ growth, as its three-year network transformation bears fruit.

“We rate this stock Buy given its exposure to Emerging Market data demand, with diversification providing safety,” says Navin.

Shares of Singtel are trading 3 Singaporean cents higher at S$3.79.