We believe SingTel (SGX:Z74)’s Indonesian associate’s integration with its parent’s fixed broadband (FBB) business (IndiHome) will expand its addressable market and drive customer stickiness with potential for greater ARPU uplift.
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We also see SingTel paying FY23F dividend at the top-end of guidance. Our target price for SingTel factors in a 6% ESG premium based on our in-house methodology.
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Fixed-mobile convergence (FMC) deal signed.
SingTel’s 35%-owned associate Telekomunikasi Selular (Telkomsel) has inked a conditional spin-off agreement (CSA) that will see parent Telkom Indonesia (TLKM IJ)'s wholly-owned fibre broadband wing integrated into Telkomsel’s mobile business. See SingTel's announcement dated 06 April 2023.
This transaction crystallises the FMC (Fixed-Mobile Convergence) strategy articulated earlier and is consistent with SingTel’s business pivot towards high-growth assets.
Globally, there is some evidence of FMC serving as a potent acquisition tool to snare and lock-in mobile subscribers from rivals.
Stake dilution should be viewed in the context of a larger addressable market.
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