Broker: UOB Kay Hian
Date of Report: Thursday, 14 August 2025
Singtel Delivers Strong 1QFY26 Results: Double-Digit Profit Growth and Positive Outlook for Investors
Introduction: Singtel’s Impressive Start to FY26
Singtel, Southeast Asia’s leading telecommunications company, has reported a robust start to FY26 with its first quarter results beating expectations. The company achieved a 14% year-on-year (yoy) increase in underlying net profit, buoyed by performance improvements across its major business units and strong contributions from regional associates. This article provides a comprehensive breakdown of Singtel’s latest financial performance, operational highlights, and strategic outlook, as detailed by UOB Kay Hian.
Company Overview: A Regional Telecom Powerhouse
Singtel offers a wide array of telecommunications services, including mobile, fixed-line, data, internet, TV, and digital solutions. With significant operations in Australia (Optus), India, Indonesia, Thailand, and the Philippines, the company commands a strong position in the region’s telecom landscape.
- Share Price: S\$4.06
- Target Price: S\$4.58
- Market Cap: S\$67.0 billion
- Dividend Yield FY26F: 4.5%
- Major Shareholder: Temasek Holdings (50.3%)
1QFY26 Financial Overview: Key Highlights
- Operating Revenue: S\$3.39 billion (down 0.6% yoy, up 2.9% in constant currency)
- Group EBITDA: S\$990 million (up 1.3% yoy, 4.7% in constant currency)
- Underlying Net Profit: S\$686 million (up 13.9% yoy, 16.7% in constant currency)
- Reported Net Profit: S\$2.88 billion (includes one-off S\$2.2 billion gain from Airtel stake sale and Intouch-Gulf Energy merger)
- EBITDA Margin: 29.2% (vs 28.6% in 1QFY25)
- Regional Mobile Associates’ Pre-Tax Contribution: S\$668 million (up 18.2% yoy, 22.5% in constant currency)
Segment Analysis: Performance Across Business Units
Optus (Australia)
- Revenue: S\$1.68 billion (down 2.5% yoy, up 4.4% in constant currency)
- EBITDA: S\$487 million (up 2.4% yoy, 9.4% in constant currency)
- EBIT: Up 36% yoy, driven by lower depreciation and cost discipline
- Mobile ARPU: Postpaid at A\$48/month, prepaid at A\$19/month (both stable qoq)
- Subscriber Trends: Postpaid subscribers declined by 21,000 qoq, prepaid increased by 1,000 qoq
Optus benefited from pricing uplifts and an expanded customer base, with profitability further supported by stringent cost controls.
Singapore Consumer
- Revenue: S\$929 million (down 0.4% yoy)
- EBITDA: S\$380 million (down 1.3% yoy)
- Mobile Service Revenue: Down 11% yoy due to weaker voice and roaming demand
- Roaming Revenue: Impacted by bundled roaming in plans and lower wholesale volumes
- International Data Revenue: Up 6% yoy
- Blended ARPU: S\$23/month (stable qoq)
- Total Subscribers: Up 39,000 qoq
Despite ongoing pressure in mobile services, Singtel’s enterprise business and international data segments are showing resilience.
NCS (IT Services and Solutions)
- Revenue: S\$733 million (up 3.7% yoy, 4.3% in constant currency)
- EBITDA: S\$97 million (up 16% yoy, 15.4% in constant currency)
- EBIT: Up 22% yoy, reflecting cost efficiencies
- Orderbook: S\$732 million
- Key Initiatives: S\$130 million investment to accelerate AI adoption among clients
NCS delivered strong growth, particularly in its Gov+ subsegment, offsetting some softness in enterprise and telco subsegments.
Digital InfraCo
- Revenue: S\$107 million (down 1.8% yoy)
- EBITDA: S\$58 million (up 7.2% yoy)
- EBIT: Up 29% yoy
- Cost Management: Lower utility and depreciation costs, offsetting expansion expenses
Digital InfraCo is expected to deliver stronger earnings with the completion of new data centres in Thailand and Singapore.
Regional Associates
- Telkomsel (Indonesia): Pre-tax contribution S\$147 million (down 21.9% yoy) due to data competition and macroeconomic headwinds, but market shows signs of recovery
- AIS (Thailand): Pre-tax contribution S\$125 million (up 28.9% yoy), driven by higher ARPU and expanded customer base
- Globe (Philippines): Pre-tax contribution S\$70 million (down 14.7% yoy) amid weak consumer spending and competition
- Bharti Airtel (India): Pre-tax contribution S\$327 million (up 123.1% yoy), fuelled by customer growth and tariff hikes
Key Financial Metrics and Outlook
| Year to 31 Mar (S\$ million) |
2025 |
2026F |
2027F |
2028F |
2029F |
| Net Turnover |
14,128 |
14,146 |
14,435 |
14,883 |
15,230 |
| EBITDA |
3,597 |
3,792 |
4,024 |
4,265 |
4,409 |
| Operating Profit |
1,153 |
1,381 |
1,504 |
1,744 |
1,878 |
| Net Profit (Reported) |
795 |
4,017 |
2,716 |
2,973 |
3,160 |
| Net Profit (Adjusted) |
2,261 |
2,470 |
2,716 |
2,973 |
3,160 |
| EPS (S\$ cent) |
13.7 |
14.9 |
16.4 |
18.0 |
19.1 |
| Dividend Yield (%) |
3.7 |
4.3 |
4.5 |
4.8 |
5.1 |
| Net Margin (%) |
5.6 |
28.4 |
18.8 |
20.0 |
20.7 |
| ROE (%) |
3.1 |
15.8 |
10.6 |
11.7 |
12.6 |
Stock Valuation, Dividend, and Outlook
- Target Price: S\$4.58 (SOTP-based, 7% discount rate, 2.5% growth rate)
- Current Upside: +12.8%
- Dividend Yield: 4.5% for FY26F
- Key Catalysts: Monetisation of 5G assets, data centres, NCS, and market repair in Singapore
- Valuation Multiples (FY26F): PE 27.2x, P/B 2.6x, EV/EBITDA 20.1x
Singtel’s ongoing monetisation plans, active capital management, and improving business fundamentals make it an attractive investment opportunity, especially in volatile market conditions.
Conclusion: Singtel Well-Positioned for Sustainable Growth
Singtel’s 1QFY26 results reinforce the company’s growth trajectory and strategic focus on enhancing shareholder value. With double-digit profit growth, a healthy dividend yield, and several catalysts on the horizon—including data centre expansion and 5G monetisation—Singtel stands out as a resilient and compelling choice for investors seeking exposure to the regional telecom sector.
Disclaimer
This article is based solely on the information provided in the UOB Kay Hian research report dated 14 August 2025. It does not constitute investment advice. Investors should conduct their own due diligence before making any investment decisions.
