SingTel - Maybank Research 2024-11-14: Progressing As Planned, But A Few Areas Of Weakness

• Of SingTel’s 8 business units (4 core and 4 associates), 6 are tracking within or ahead of expectations. Telkomsel’s softness remains a concern while we see initial signs of weakness in Singapore mobile.
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Core: impressive cost cuts but slight SG mobile cracks

• SingTel's 1HFY25 core revenue grew 2% y-o-y, helped by Optus mobile (up 4% y-o-y), data centres (up 17% y-o-y) and NCS (up 3% y-o-y).
• SingTel noted that by 1HFY25, it was roughly halfway in meeting its S$200m cost-cut targets that lead to a 9% y-o-y EBITDA & 27% EBIT growth. SingTel revised up its FY25 EBIT growth target.

Singapore

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• While management linked the elevated mobile competition as a precursor to potential industry consolidation, we see it also due to the growing presence of No.4 mobile operator Simba, which recently posted 36% y-o-y revenue growth and an impressive 42% EBITDA margins in Aug‘24 ending semester. Given Simba’s still low market share and balance sheet strength, we think it may continue to maintain its aggressive pasture. This in turn could reduce the effectiveness of potential industry consolidation to reduce competitive intensity, in our view.
• Non-mobile Singapore businesses were also under pressure, declining 4% y-o-y, however, they were on expected lines linked to high legacy component.

Optus

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Hussaini Saifee Maybank Research | https://www.maybank.com/ 2024-11-14 SGinvestors.io

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