• Global communication indices have outpaced broader global benchmarks this year, while SGX-listed Singtel, AIS TH SDR, NetLink NBN Trust, Starhub and Asian Pay TV Trust have averaged 20% total returns. Singtel has led these 5 counters this year, with a 37% total return, while also seeing its 2024 average daily turnover soar 90% from 2023 levels.

• Singtel has led the net institutional inflow into all local stocks this year with S$938 million of net buying. Starhub has again ranked among the 20 stocks with the highest net institutional buying this year as it did in 2023. While most institutional activity on AIS is booked in Thailand, the AIS TH SDR can facilitate block trades in minimum clips of at least 50,000 units.

• Both NetLink NBN Trust and StarHub maintain 5.8% indicative yields, which compares to 1.3% for the MSCI World Communication Services Index. Since listing in July 2017, NetLink NBN Trust has generated a 64% total return, with unit prices increasing from S$0.81 to S$0.91, while accrued distributions have totalled of 33.9 Singapore cents.

• Recent years have seen the sector pursue and extend strategic transformation initiatives, which includes Singtel's Singtel28, StarHub’s Dare+ and NetLink’s five pillar strategic focus.

Going into 2024, global portfolio managers maintained the global telecommunication services sector’s recovery earnings, AI advancements, and reasonable valuations suggested further growth potential. As anticipated, both earnings and book valuations of the largest global telecommunications stocks now stand one quarter higher than their end of 2023 levels.

Deloitte also maintained key industry drivers in 2024 would include further operational efficiency shifts, generative AI, broadband connectivity, cloud competition and 5G spending. With the widening field of consumer tech, it may be of little surprise that global communication indices have also paralleled performances of global technology indices this year. Meanwhile increased competition, cybersecurity challenges, regulatory developments, and changing consumer and business preferences have remained global industry challenges.

Looking ahead to 2025, Oliver Wyman suggest telecommunication service operators seeking revenue growth differentiation might pursue more-for-more packages, leveraging data to outsmart competition, new adjacent products and applications, data-privacy and multiservice-platform businesses, and ICT and data services for business.

In Singapore, the five most traded stocks of the sector have averaged 18% total returns in the 3Q24 through to 25 Sep, led by Advanced Info Service (AIS) PCL TH SDR (SGX:TADD) and SingTel (SGX:Z74).

Note: AIS YTD Total Return %, P/B and yield taken from Thailand listing.
Source: SGX & Refinitiv. All Data as of 25 Sep 2024.

Singtel (SGX:Z74)

Singtel’s trading participation in 2024 has surged by 90%, from S$50 million in 2023 to S$95 million in 2024, with its share price increasing by 33% to S$3.29. This has positioned Singtel as the leader in net institutional inflow to the Singapore stock market in 2024, booking S$938 million through to Sep 25.

In Singtel's business update dated 15 Aug, the Group highlighted it had seen a strong start to FY25, with improvements in core businesses and a new data centre project in Malaysia, alongside a 5.4% rise in underlying net profit to around S$600 million for 1QFY25 (ended 30 June). This followed the announcement of the Singtel28 growth plan in May. On a constant currency basis, underlying net profit would have increased 8.7%.

Citing an improvement in business performance, Singtel has also increased its core dividend from 9.9 cents to 11.2 cents this fiscal year. This excludes a separate 3.8 cent value realisation dividend funded by excess capital from their asset recycling efforts, bringing their total distributions this fiscal year to 15 cents at a 4.0% indicative distribution yield.

Advanced Info Service (AIS)

AIS is Thailand’s largest telecommunications conglomerate and partially owned by Singtel. It is one of the two largest mobile operators in Thailand, and is also the largest player in the high-speed internet broadband service. AIS TH SDR has seen its share price rise 38% to S$1.05 since the SDR debuted on April 1.

AIS reported its 2QFY24 net profit growth increased 19% from 2QFY23, and maintained its 2024 EBITDA guidance of 14% to 16% y-o-y growth. AIS is also expected to see improving revenue and profits from the consolidation of players in the telecommunications industry. The company has an indicative distribution yield of 3.6%.

AIS TH SDR trades in Singapore dollars, in board lot size of 100 units, and are fungible with the underlying non-voting depository receipts (NVDR) of the underlying stock listed in Thailand in a ratio of 10 SDR to 1 underlying NVDR. The AIS TH SDR can also facilitate block trades in minimum clips of at least 50,000 units.

Refer to SingTel's announcement titled 'Notification of Intouch Board Resolutions' on 16 Jul for more details on the initiative to simplify the ownership structure of AIS, and the amalgamation of Intouch and GULF Energy Development.

NetLink NBN Trust (SGX:CJLU)

NetLink NBN Trust is a Business Trust that provides ultra-high-speed internet access across the Singapore and connected islands. It designs, constructs, and maintains the essential passive fiber infrastructure, ensuring comprehensive coverage for both residential and non-residential premises.

Since listing in July 2017, NetLink NBN Trust has generated a 64% total return, with unit prices increasing from S$0.81 to S$0.91, while accrued distributions have totaled of 33.9 cents. The Business Trust ranks among Singapore’s 50 most traded stocks and maintains a S$3.5 billion market value and indicative distribution yield of 5.8%.

In NetLink NBN Trust's announcement dated 2 Aug, NetLink NBN Management Pte Ltd updated NetLink NBN Trust saw a 2.9% decrease in revenue and a 2.4% decrease in EBITDA for its 1QFY25 (ended 30 June) compared to 1QFY24. Despite stable Regulated Asset Base (RAB) revenue, overall revenue fell by S$3.0 million due to lower ancillary project revenue, while EBITDA was impacted by lower non-operating income and higher operating expenses.

Residential connections grew from 1,489,294 to 1,524,372 y-o-y, driven by new high-speed broadband plan connections. The number of non-residential connections increased from 52,522 to 53,382, Non-Building Address Points (NBAP) connections rose from 2,757 to 2,944, and segment connections grew from 3,003 to 3,646 in 1QFY25 compared to the same period last year. For reference, in FY24, revenue was segmented 60.2% to residential connections, 8.1% to non-residential connections and 4.8% to NBAP and segment connections. The trust’s RAB revenue also includes ducts and manhole services, as well as co-location (11.4% of FY24 revenue) and non-RAB revenue (15.5% of FY24 revenue).

StarHub (SGX:CC3)

StarHub is transforming from a traditional telecommunications provider into a dynamic digital ecosystem player, broadening its product and service offerings by adopting cloud computing, cybersecurity, artificial intelligence, and the IoT.

StarHub ranks among Singapore’s 20 stocks that have booked the highest net institutional inflow this year and maintains a S$2.1 billion market value and indicative distribution yield of 5.8%.

The Group’s performance for 1HFY24 (ended 30 June) aligned with the guidance provided in February 2024. Reflecting the progress of DARE+ and current macroeconomic and market conditions, the Group reaffirmed in August its FY24 guidance announced on 14 Aug: Service Revenue is expected to grow 1% to 3% y-o-y, excluding the impact of the D’Crypt divestment, with stable contributions from Consumer and Enterprise segments and increased contributions from Regional ICT Services and Cybersecurity Services. The Service EBITDA margin is anticipated to be around 22%, benefiting from DARE+ and ongoing cost optimisation efforts. Capex commitment as a percentage of total revenue is projected to be 4% to 6% for business-as-usual activities and 11% to 13% including investments, mainly due to ongoing investments in IT and Network Transformation and other DARE+ initiatives like Cloud Infinity.

Finally, a dividend of 6.0 cents per ordinary share for FY24 is planned, considering short- to mid-term business conditions, cash flow, investment requirements, and expected results from ongoing business transformation initiatives.

Asian Pay TV Trust (SGX:S7OU)

Asian Pay TV Trust (APTT) is also a Business Trust. Its mandate is to own & operate pay-tv and broadband businesses in Taiwan, Hong Kong, Japan & Singapore. In its financial statement announcement dated 14 Aug, The Trust reported weaker 1HFY24 (ended 30 June) revenue and EBITDA due to a weaker NT$, where revenue decreased by 3.6% from 1HFY23 in NT$, with EBITDA in constant dollars decreasing 1.6%. Foreign exchange contributed to a negative variance of 3.4% for 1HFY24, seeing total revenue decline 7.0% from 1HFY23 in S$ terms.

As highlighted in Slide 5 of the 2QFY24 investor presentation, APTT’s total subscriber base increased by 13,000 to 1,332,000 in 2QFY24, driven by broadband and premium digital TV subscribers, but partially offset by a fall in basic cable TV subscribers. The Trust attributed this mainly to aggressive marketing efforts to attract customers through attractively priced bundled promotions.

APTT has distributed 0.525 Singapore cents per unit for 1HFY24 (ex-div on 19 Sep) in-line with the distribution guidance of 1.05 Singapore cents per unit for the fiscal year. Looking ahead, while the Trustee-Manager does not expect growth in basic cable TV revenue generating units (RGU) due to Taiwan’s saturated cable TV market, it expects the number of premium digital TV and broadband RGUs to continue increasing in 2024.