- Stock-picking remains key for investing in Singapore telcos in 2025. SIM-only competition should remain elevated in an ex-growth market, with the narrative still on industry consolidation.
Market talk of a StarHub-M1/Simba Telecom union continues to dominate; M&As could lend excitement.
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- Broadly, we think 2025 could bring more M&A flow for the sector, helped by the interest rate downcycle and strong investment propositions specifically for infrastructure assets.
- Telcos are also looking to strengthen their franchise values on the “techco” journey and on the back of the artificial intelligence (AI) boom.
Singtel’s EBIT on track for low-double digit growth in FY25 (Apr 2024 to Mar 2025).
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- EBIT from the core Singapore and Optus units grew 12.8% in 1HFY25, which puts it on track to achieve the low double-digit growth guided for the full year. We note Optus’ EBIT (AUD terms) surged 58% on good cost efficiencies, while NCS’ EBIT jumped 40% from higher delivery margins.
- Management indicated it is at the halfway mark of the S$200m opex savings target for FY25F. Overall, we continue to see SingTel’s mid-term capital recycling target of S$6bn supporting the variable realisation dividends (VRD), with ~S$1bn (6 cents/share) to be recognised over the next six months.
StarHub is set to harvest the benefits of its transformation exercise; changing market dynamics could temper positives.
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Singapore Research RHB Investment Research | https://www.rhbgroup.com/ 2025-01-07
