SingTel - RHB Invest 2023-04-07: Telkomsel Inks Fixed-Mobile Convergence Conditional Spin-Off Agreement; Keep BUY

• 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.
• - Read this at SGinvestors.io -
• 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.
• - Read this at SGinvestors.io -

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.

• Read more at SGinvestors.io.

Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2023-04-07 SGinvestors.io

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