Singtel's share price has outperformed but we see further growth drivers underpinned by:
Optus’s operating environment, which continues to strengthen,
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AI and data centre-linked opportunities, which are substantial, with Singtel well-positioned to capture upside.
We see a marked improvement in its Indonesia and Philippines associates, placing all associates in a strong position. Forex is a headwind but is far outweighed by opportunities.
Optus: Multi-engine recovery in motion
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Optus rightsizing initiatives which have more legs to execute (margins are 4-5ppt below Telstra/TPG) &
capex cycle has peaked while MOCN (multi-operator core networks) partner-ship with TPG allows further capex optimization.
Factoring in tailwinds, we raise our Optus EBIT estimate by 5-20%. We expect Optus mobile revenues, EBIT and FCF CAGR of 4%, 27% and >100%, respectively, over FY25-28.
Factoring superior growth & lower WACC, we raise our Optus DCF valuation by 36% at 8x EV/EBITDA – still a 2-11% discount to Telstra and TPG.
Singapore mobile: Consolidation to drive rationality
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
