We still like the sector because of its resilient earnings ? we see the potential of earnings disappointment for the market as a whole if the expected V-shaped recovery does not materialize.

With the market looking slightly toppish around 2600-2700, the risk of suffering a sharp pullback is less for the telcos given that they have generally lagged the market in terms of YTD gains.

Another talking point is the BPL broadcast rights for 2010-2012 ? we think that StarHub is still in the pole position to win it. We don't think SingTel would want to win it now (especially at a high price) given its limited distribution capability.

Things are likely to change when the NBN comes fully on-stream by 2012.

Not only for SingTel but potentially be good for M1 ? they will be able to offer a more integrated package and also branch into the more lucrative corporate broadband space.

M1 has highlighted its intention with the recent acquisition of Qala.

Again, we think that defensive stocks like the telcos remain relevant in today's context and their almost certain dividend payouts are attractive. In the longer term, the NBN could also bring new growth opportunities for the sector. Maintain OVERWEIGHT.