Broker: Maybank Research Pte Ltd
Date of Report: August 7, 2025

Singtel Powers Ahead: Strong Associate Growth, Turnaround Signs, and Robust ESG Drive Future Upside

Executive Summary: Singtel’s Strategic Growth and Resilient Outlook

Singapore Telecommunications (Singtel, ST SP) continues to deliver strong results, driven by impressive growth from its key associates such as Bharti Airtel and AIS, while effectively navigating macroeconomic and currency headwinds. With a diversified presence across Singapore, Australia, India, Indonesia, Thailand, and the Philippines, Singtel remains a top pick for investors seeking exposure to the ASEAN and Asia-Pacific telecommunications sector. The company’s commitment to cost optimization, peaking 5G investments, attractive dividend yields, and robust ESG practices further enhance its investment appeal.

Associate Performance: Airtel and AIS Shine, Telkomsel and Globe Stabilizing

• Overall Associate Contributions: Singtel’s associates’ post-tax contributions rose 15% year-on-year (YoY) for 1QFY26, outpacing the full-year growth expectation of 7%. On a normalized basis (excluding Intouch’s amalgamation with Gulf), YoY growth jumps to 23%, with a 4% quarter-on-quarter (QoQ) rise.
• Bharti Airtel (India): Delivered a stellar all-round performance:
  • Revenue up 18% YoY and EBITDA up 22% YoY in 1QFY26.
  • Strong mobile growth in India, robust advances in enterprise/cloud, home broadband, and telco software platform (Xtelify).
  • Capex intensity declining, operating free cash flow (FCF) surged 52% YoY to USD560m.
  • Low leverage provides room for higher dividends and potential M&A in enterprise adjacencies.
• AIS (Thailand): Continued outperformance in 2QCY25:
  • Service revenue increased 7% YoY (2% QoQ), with strong results across segments despite weak macro conditions.
  • Tight cost control, declining depreciation/amortization (D&A), and lower interest expenses powered earnings.
  • Raised guidance: Revenue and EBITDA growth raised to 4-6% for CY25 (from prior 3-5%).
• Telkomsel (Indonesia): Earnings fell 15% YoY in 2QCY25 as revenue slipped 7% YoY, mainly in mobile, due to weaker consumer spending and cheap data starter packs.
  • Corrective actions since March 2025: Starter pack prices raised from IDR25k/6GB to IDR35k/3GB, with competitors following suit.
  • Slight consumer spending improvement seen from June, helped by fiscal stimulus.
  • Full-year guidance implies 5% half-on-half revenue growth in 2H25, driven by consumer segments.
• Globe Telecom (Philippines): Earnings declined 11% YoY in 2QCY25 on a 2% service revenue dip, mainly from weak consumer spending.
  • Signs of recovery: Revenue up 1% QoQ, aided by mobile and broadband segments.
  • GCash, Globe’s fintech arm, saw earnings jump 71% YoY and contributed 36% of Globe’s total earnings.
  • Management maintains full-year guidance for low single-digit revenue growth, signaling a recovery in 2H25.

Company Snapshot: Singtel’s Market Position and Performance Metrics

• Share Price (as of report): SGD 4.01
• 12-Month Price Target: SGD 4.30 (+12%)
• Market Capitalization: SGD 66.2B (USD 51.5B)
• 52-Week High/Low: SGD 4.17 / SGD 2.84
• Issued Shares: 16,515 million
• Key Shareholders:
  • Temasek Holdings: 52.0%
  • Central Provident Fund: 4.7%
  • The Vanguard Group: 1.6%
• Dividend Yield: 5.9% (FY24A), 5.0% (FY25A), rising to 5.5% by FY28E

Financial Performance and Outlook

Currency Headwinds: FX Impact on Earnings

• FX depreciation was a key drag in 1QFY26: IDR and INR depreciated 7% YoY against SGD, impacting earnings from Telkomsel and Airtel.
• AUD also fell 7% YoY, dampening Optus’ contribution at the consolidated level.

Company Valuation: Sum-of-the-Parts and Holdco Discount

• Holdco Discount: Singtel trades at a 39% holdco discount, seen as unwarranted given positive tailwinds.
• SoTP Valuation: Key business and associate valuations include:
  • Singtel Singapore Business (DCF, 8.3% WACC): SGD 11.6B (SGD 0.70/share)
  • Optus (DCF, 8.1% WACC): SGD 9.1B (SGD 0.55/share)
  • Data Center (Nxera, DCF, 7.8% WACC): SGD 7.0B (SGD 0.42/share)
  • Bharti Airtel stake: SGD 34.5B (SGD 2.09/share)
  • AIS stake: SGD 7.4B (SGD 0.45/share)
  • Globe stake: SGD 4.3B (SGD 0.26/share)
  • Intouch stake: SGD 2.4B (SGD 0.15/share)
  • NetLink NBN Trust: SGD 0.9B (SGD 0.06/share)
  • SingPost: SGD 0.2B (SGD 0.01/share)
• Associates subtotal: SGD 57.2B (SGD 3.46/share)
• 25% Holdco Discount: -SGD 1.27/share
• Total Equity Value (after net debt): SGD 3.65/share

ESG Leadership: Sustainability, Governance, and Social Responsibility

• Environmental:
  • Brought forward net-zero goal from 2050 to 2045.
  • Reduced Scope 1 and 2 emissions by 11.3% in FY23.
  • GHG emissions intensity improved to 0.030 tCO2e/TB (from 0.035).
  • Four new solar energy projects (1.38MWp), expected to generate 1,700MWh annually.
• Governance:
  • Board comprises 14 directors, 43% female, with all committees chaired by independent directors.
  • Key management compensation at 0.8% of group net profit in FY23.
  • No corruption cases reported in the past three years.
  • Strict compliance with data protection laws in Singapore and Australia.
• Social:
  • Notable initiatives for digital inclusion and community support, including free remittance services for migrant workers and refurbished laptops for disadvantaged students.
  • Optus’ “Donate Your Data” program in Australia supports students’ online learning needs.
  • Recognized by the Bloomberg Gender Equality Index for five consecutive years.
  • SGD 57.9m invested in digital skills training (FY21-23); SGD 32.1m pledged for FY24-25.
  • Zero fatality rate across Singtel and Optus in FY23.
• ESG Scores:
  • Quantitative: 88
  • Qualitative: 83
  • Target: 80
  • Overall ESG Score: 85 (well above industry average)

Investment Case: Opportunities and Risks

• Opportunities:
  • Potential restructuring at Optus could boost Return on Invested Capital (RoIC) and FCF.
  • ARPU growth from easing price competition in key markets.
  • Execution of targeted cost savings can further lift margins.
• Risks:
  • Delays or fines related to Optus network outage.
  • Intensifying price competition in core markets.
  • Currency headwinds impacting overseas contributions.

Key Listed Companies Covered

• AIS (ADVANC TB, THB296.0, TP: THB320.0): BUY. Consistent earnings growth, strong segment performance, upgraded guidance.
• Globe Telecom (GLO PM, PHP1718, TP: PHP2750): BUY. Recovery in service revenue, fintech (GCash) momentum, sustained full-year targets.
• Telkomsel (70% owned by Telkom Indonesia, TLKM IJ, IDR2990, TP: IDR3700): BUY. Earnings under pressure but turnaround steps in place; consumer rebound anticipated.
• Intouch (now part of Gulf Development, GULF TB, THB47.0, TP: THB45.0): HOLD. Amalgamation with Gulf completed.
• Bharti Airtel (BHARTI IN, INR1929.70): Not rated. Excellent growth, strong FCF, and M&A optionality.
• Optus: Unlisted, 100% Singtel-owned. Facing FX headwinds; strategic transformation in focus.

Conclusion: Singtel’s Momentum Poised for Further Upside

Singtel’s broad-based earnings growth, driven by high-performing associates and operational improvements, combined with a disciplined approach to capital management and ESG, make it a compelling pick in Asian telecoms. While currency headwinds and competition remain, Singtel’s resilient model, attractive yield, and strategic initiatives position it well for continued value creation.

Historical Recommendations and Target Price Trends

• Consistent BUY ratings since July 2022, with target prices trending upwards, reaching SGD 4.3 in May 2025.
• Current recommendation: BUY, with a target price of SGD 4.30, representing a 12% upside from current levels.

Contact Information

For further information and research inquiries, reach out to Maybank Research Pte Ltd or the lead analyst Hussaini Saifee at [email protected].
This detailed analysis provides investors, analysts, and market watchers a comprehensive overview of Singtel’s financial health, strategic outlook, associate performance, and ESG leadership as of August 2025.