SingTel NDR Takeaway - Maybank Research 2024-07-02: Multiple Catalysts & Dividend Clarity; Reiterate BUY

• We hosted SingTel (SGX:Z74)’s management on a non-deal roadshow (NDR) in Bangkok. Following are our key take-aways.

Potential for Singapore mobile consolidation?

• - Read this at SGinvestors.io -
• That said, SingTel is unlikely to drive consolidation given its dominant market share of 46%.
• Management sees the upcoming 700MHz spectrum payments (auctioned in 2017) as a potential trigger point for consolidation as payment required from StarHub (SGX:CC3) and M1 are ~S$190- 280m each, which is a material outgo relative to their cash flows while 5G spectrum is already built-out. There is limited need for more spectrum in our view.

Optus trinity: Firm revenues, opex & capex reduction

• - Read this at SGinvestors.io -
• Of its S$200m/pa in projected opex savings target for FY25-26, a significant part comes from Optus, helped by enterprise services rationalisation (focused more on SMEs and mid-market segments) as well as its TPG network partnership.
• Optus’ capex likely peaked in FY24 (capex-to-sales ratio of 20%) and is expected to normalise to mid-teens in the medium term. Management expects that with the above tailwinds it can reach a similar RoIC to that of its Australian competitors (Telstra RoIC is at 8% vs Optus FY24 at ~1%).

Dividend clarity: Enough dry powder

• Read more at SGinvestors.io.

Hussaini Saifee Maybank Research | https://www.maybank-ke.com.sg/ 2024-07-02 SGinvestors.io

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