A measure of indebtedness commonly used in the Telco industry is debt divided by EBITDA. With a ratio higher than 3, investors are advised to proceed with caution.
I did a little calculations of the debt to equity ratios for the three telcos in Singapore (SingTel, StarHub and M1). Here are my findings:
SingTel
Total debt = $12,754.4 million
EBITDA = $4,431.2 million
Debt/EBIDTA ratio = 2.8
StarHub
Total Debt= $1606.80 million
EBITDA = $653.5
Debt/EBIDTA = 2.8
MobileOne (M1)
Total debt = $581.4million
EBIDTA = $309.7million
Debt/EBIDTA = 1.8
It seems like M1 has the lowest Debt/EBIDTA ratio though all three companies meet the criteria of having ratios below 3.
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3 comments:
So u recommend M1 in term of FA?
Currently the price of M1 i find it over price
Hi Dou,
Nope. I am not recommending M1. I am just comparing the various debt levels for the telcos.
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