Singtel Delivers Robust Q1FY26 Results: Profit Surges, Optus Shines, and Major Airtel Divestment Unlocked S\$2B

Strong Start to FY26: Singtel’s Profit Soars on Strategic Moves and Operational Performance

Singapore Telecommunications Limited (Singtel) kicked off FY26 with a powerful first quarter, delivering a 14% increase in underlying net profit after tax (NPAT) and unveiling several strategic moves that could drive further shareholder value. The group’s results, buoyed by strong performances from Optus and NCS, as well as higher profit contributions from regional associates like Airtel and AIS, signal a positive outlook for the year ahead.

Key Highlights Retail Investors Must Know

• Underlying NPAT up 14% (17% in constant currency): Driven by higher EBIT, especially from Optus and NCS, and higher profit contributions from Airtel and AIS.
• Operating Company EBIT up 10% (11% constant currency): Optus’ mobile growth and NCS’s margin improvements were key drivers.
• Regional Associates’ PAT up 15% (19% constant currency): Particularly strong results from Airtel (India) and AIS (Thailand).
• S\$2B Cash Unlocked from Airtel Divestment: Singtel divested a 1.2% stake in Airtel, unlocking S\$2 billion in cash, part of a broader S\$9 billion capital recycling initiative.
• Net Profit Soars 317% to S\$2.88B: Includes a one-off exceptional gain of S\$2.2 billion from the Airtel partial stake sale and the Intouch-Gulf Energy merger.
• FY26 Guidance On Track: High single-digit EBIT growth, S\$0.2 billion in annual cost savings, and S\$1.0 billion in regional associates’ dividends (S\$0.6 billion already collected in Q1).

In-Depth Performance Review and Potential Share Price Catalysts

1. Earnings Momentum and Divestment Windfall

The most significant news for shareholders is the exceptional gain from Singtel’s capital management initiatives. By selling a partial stake in Bharti Airtel, Singtel unlocked S\$2 billion in cash. This move not only strengthens Singtel’s balance sheet but also provides dry powder for future investments or returns to shareholders. The total net profit for the quarter soared to S\$2.88 billion, a 317% increase from the same period last year, largely due to this exceptional gain. This capital recycling is part of a broader S\$9 billion target, suggesting further potential upside from similar deals in the pipeline.

2. Optus Delivers Consecutive Growth

Optus, Singtel’s Australian arm, extended its strong performance streak for a third straight quarter. Mobile service revenue climbed 4% due to increased ARPU (average revenue per user) and a larger customer base. EBITDA rose 9% and EBIT surged by 36%, demonstrating not just revenue growth but disciplined cost control. This robust operating momentum is a critical indicator for the group, especially as Optus continues to rebuild its brand and reputation following prior challenges.

3. NCS and Digital InfraCo: New Engines of Growth

NCS, Singtel’s IT and digital services arm, posted a 4% rise in revenue, underpinned by government contracts (Gov+), and saw a 22% jump in EBIT on higher delivery margins. The healthy project pipeline, with S\$0.7 billion in secured bookings for the quarter, bodes well for continued growth. Digital InfraCo, encompassing Nxera’s data centre business, also reported strong EBIT growth despite lower project-based satellite deployment revenue. Nxera’s focus on scaling to over 200MW capacity by end-2026 signals ongoing expansion in digital infrastructure.

4. Regional Associates: Airtel and AIS Outperform

Profit contributions from regional associates grew 15% (19% constant currency), mainly on the back of:

• Airtel India: NPAT soared 121% (constant currency), driven by market repair and mobile price hikes. However, higher interest costs in the holding company slightly offset this.
• AIS (Thailand): Continued strong growth in both mobile and fixed broadband, with an expanded customer base and ARPU uplift.
• Globe (Philippines): Faced increased competition, higher depreciation, and interest, though mitigated by disciplined cost control and strong performance from its fintech arm Mynt.
• Telkomsel (Indonesia): Macroeconomic headwinds and legacy business decline, but early signs of market recovery are emerging.

Notably, Intouch’s contribution ceased from April 2025 due to its amalgamation into Gulf Development.

5. Capital Management and Guidance

Singtel reiterated its commitment to active capital management. The S\$2 billion from the Airtel divestment is part of S\$9 billion in planned capital recycling. The company is on track to deliver high single-digit EBIT growth, S\$0.2 billion in annual cost savings across Singtel SG and Optus, and expects S\$1 billion in regional associates’ dividends for FY26 (with S\$0.6 billion already received in Q1).

6. Strategic Priorities and Growth Engines

Looking ahead, Singtel is focused on:

• Accelerating overseas enterprise business expansion and expanding 5G+ services in Singapore.
• Optus continuing brand repair and building on recent enterprise wins.
• Scaling Nxera’s data centre capacity and exploring new tier-1 regional markets.
• NCS prioritizing AI and digital resilience offerings, with a sharp focus on margin improvement.

What Should Shareholders Watch?

• Potential for Further Capital Recycling: With S\$2 billion already unlocked and a S\$9 billion target, future stake sales or asset monetisation could drive capital returns or strategic reinvestment.
• Optus and NCS as Growth Drivers: Sustained operational improvements at Optus and NCS could materially boost Singtel’s bottom line.
• Dividend Outlook: With strong profit and capital gains, shareholders could benefit from higher dividends or special payouts.
• Execution Risks: Watch for continued delivery on cost savings, margin expansion, and capital recycling initiatives.

Conclusion

Singtel’s Q1FY26 results mark a strong start to the year, with profit surging from both operational improvements and strategic asset sales. The successful divestment of an Airtel stake, robust performance from Optus and NCS, and the potential for further capital management initiatives make this quarter’s results highly price-sensitive and positive for shareholders. Retail investors should keep an eye on further capital recycling developments, ongoing improvements in Optus and NCS, and the company’s ability to sustain high dividend payouts.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult with a licensed financial advisor before making investment decisions. The information provided is based on the latest available financial report and may be subject to change.

View Singtel Historical chart here