- We raise our Singtel (SGX:Z74)'s FY26-28 underlying earnings estimates by 3-8% following a robust 1HFY26 delivery, factoring in higher associate contributions, and superior NCS and Singtel Singapore growth, partially offset by lower Optus margins.
- - Read this at SGinvestors.io -
DC push: Right to play backed by capital discipline.
- Management has signalled openness to inorganic growth in the data center (DC) space, suggesting the STT GDC deal may be imminent. While the exact stake Singtel might take (KKR is likely a co-investor) and the valuation (20–30x EV/EBITDA appears reasonable) remain uncertain, we view a deeper data center foray as strategically sound.
- Singtel brings a long track record in Singapore data centers and strong hyperscale/enterprise relationships. Expanding in developed markets also supports AIaaS/GPUaaS initiatives. Crucially, this DC push is underpinned by disciplined capital management, balancing growth investment with buffers from capital recycling for shareholder returns.
Firm associates, SG tailwinds should offset Optus drag.
- - Read this at SGinvestors.io -
- In Singapore, upcoming market consolidation and fading ultra-low-cost plans (S$7-8 plans less visible replaced by S$10-12 plans) point to easing competition, while NCS’ improving margins and higher book-to-build ratio (1.2x in 1HFY26) provide further uplift.
- Although Optus faces cost pressures post-outage, the rational Australian telco sector should support steady topline growth, helping partially offset the impact.
Following firm 1HFY26, raise earnings and target price.
- Read more at SGinvestors.io.
