Singapore Telecommunications Ltd: Rally Setup: HoldCo Discount, Clear Catalyst?
- Upgrade to BUY with revised TP of SGD5.46 (prev SGD5.36) on higher valuation of Bharti. A key catalyst could be Jio potentially filing its Draft Red Herring Prospectus in the near-term, clearing the way for tariff hikes in India.
- Street has trimmed underlying FY27F/28F group earnings by 7%/6% post 2H26 results, aligning consensus with our revised projections.
- Holding Company discount has expanded to 17% (vs ~7% in March 2026) post share price correction; OpCo EBIT growth, which has been a key share price driver, is likely to be 5% in FY27F, accelerating to 10% in FY28F.
We trim our FY27F OpCo EBIT estimates by 9% to align with management’s low- to mid-single digit growth guidance. Singtel’s guidance reflects higher competitive intensity as most telcos lowered mobile plan price by 10-15% in April 2026. Meanwhile, the conclusion of Singtel’s ~SGD200mn annual cost savings programme in FY26 limits margin support from cost optimisation. While Singtel is positioned better than its peers due to its much bigger enterprise business, we project its FY27F Singapore telco EBITDA/EBIT to see a 3.5% y/y / 8.4% y/y decline. This could almost offset the growth from Optus as shown below with datacentre and NCS driving most of the growth.
OpCo EBIT to grow slowly in FY27F but likely to accelerate in FY28F
Source: Company, DBS Bank
Data-centre business to grow sharply in FY27F while GPU as a service (GPUaaS) growth to be skewed towards FY28F. Datacentre (DC) business is possibly slightly ahead of its target to double its EBITDA from SGD163mn in FY24 to SGD326mn in FY28F. In FY26, DC business achieved an EBITDA/EBIT of SGD194mn/72mn, which we project to rise to SGD294mn/109mn in FY27F given the opening up of Tuas DC in Jan 2026. Tuas DC with 58MW capacity almost doubles Singtel’s DC capacity in Singapore with per MW pricing of Tuas DC significantly higher than existing ones. Singtel has disclosed that over 90% of Tuas DC capacity is pre-leased already.
Singtel is planning to invest in 11MW capacity for GPUaaS. For reference, Singel has disclosed 1MW of GPUaaS generated SGD25m revenue in FY26. The rollout remains phased with deployment expected over the next 6–12 months. We understand GPUaaS business has a payback time of 2-3 years whereas the life of GPU is 4-5 years, generating a healthy return on investment. However, depreciation and operating costs begin before full utilisation is achieved, creating a near-term drag on margins. We think that GPUasS business can offset the drop in the satellite business in FY27F. We expect meaningful monetisation from GPUaaS to skew more toward FY28F. We estimate SGD275mn of GPUaaS revenue in FY28F, generating an EBITDA of SGD165mn and an EBIT of SGD55mn. GPUaaS alone is likely to drive over 3% OpCo EBIT growth in FY28F in our estimates.
A key catalyst could be Jio potentially filing its Draft Red Herring Prospectus (DRHP) in the near-term, clearing the way for tariff hikes in India. Bharti has been advocating a sharp tariff hike in FY27F, raising the ARPU to INR350 in the medium term from its current INR257 ARPU in 4Q26. However, Jio has been talking about 4-5% y/y ARPU hike driven by customer up trading and bundling of value-added services even without a tariff hike. We understand the issue is that past tariff hikes have benefited Airtel’s revenue share mix disproportionately due to its premium subscriber mix. In our view, Jio might not hike until its IPO DRHP is filed to reflect its No.1 revenue market share in the country. While it is difficult to comment on the timing of the DRHP filing, various media reports suggest that DRHP is likely to be filed in the calendar year of 2026.
Singtel’s Holding Company discount has expanded to 17% in May 2026 (vs ~7% in March 2026)
Source: Companies, Oanda, DBS
We cut our OpCo EBIT expectations for FY27F/28F by 9%/10% due to weakness in Singapore consumer and delayed benefits from GPUaaS
| SGDmn | FY26 | DBS (Previous) | DBS (Revised) | % change | ||||||
FY27F | FY28F | FY29F | FY27F | FY28F | FY29F | FY27F | FY28F | FY29F | ||
| Revenue | 14,261 | 14,869 | 15,240 | 15,469 | 14,803 | 15,376 | 15,936 | 0% | 1% | 3% |
| Core EBIT | 1,504 | 1,748 | 1,944 | 2,014 | 1,586 | 1,752 | 1,915 | -9% | -10% | -5% |
| Associate (pre-tax) | 2,887 | 3,258 | 3,719 | 3,868 | 3,345 | 3,822 | 4,166 | 3% | 3% | 8% |
| Underlying earnings | 2,769 | 3,164 | 3,590 | 3,739 | 3,101 | 3,516 | 3,858 | -2% | -2% | 3% |
Source: Company, DBS
Our expectations for underlying earnings in FY27F/28F are in line with consensus –we were cautious earlier in March 2026 due to downside risk to consensus projections
| SGDmn | FY26 | DBS (Revised) | Consensus (Visible Alpha) | DBS vs Consensus | ||||||
FY27F | FY28F | FY29F | FY27F | FY28F | FY29F | FY27F | FY28F | FY29F | ||
| Revenue | 14,261 | 14,803 | 15,376 | 15,936 | 15,075 | 15,626 | 16,057 | -2% | -2% | -1% |
| Core EBIT | 1,504 | 1,586 | 1,752 | 1,915 | 1,621 | 1,795 | 1,874 | -2% | -2% | 2% |
| Associate (pre-tax) | 2,887 | 3,345 | 3,822 | 4,166 | 3,160 | 3,659 | 4,145 | 6% | 4% | 1% |
| Underlying earnings | 2,769 | 3,101 | 3,516 | 3,858 | 3,075 | 3,495 | 3,838 | 1% | 1% | 1% |
Source: Company, Visible Alpha, DBS
Upgrade to BUY with a revised TP of SGD5.46 (from SGD5.36). Our higher TP is primarily due to a higher fair value of Bharti Airtel at INR2300 (prev INR2000) based on the consensus target price of INR2300. Consequently, we adjust our associates’ valuation to SGD4.12 per share (prev. SGD3.79). Bharti accounts for ~64% & 49% of our sum-of-the parts valuation for regional associates and Singtel group respectively. Also, we have lowered our valuation of core business to SGD1.35 per share from previous SGD1.57 per share on lower OpCo EBIT and higher net debt estimates. We continue to value Singapore and Optus at 6x 12-month forward EV/EBITDA, 25x 12-month forward EV/ EBITDA for Data centre business. We value standalone GPUaaS business at 20x EV/EBITDA based on the peer average.
Singtel’s core business is valued at SGD1.35 per share (previous SGD1.57 per share) due to lower Singapore business
12m fwd EBITDA (SGDmn) | EV/EBITDA | Exchange Rate | Ownership | Value (SGDmn) | Per Share (SGDmn) | |
| Singapore business excluding Data Centre | 1,680 | 6.0 | 1.0 | 100% | 10,079 | 0.61 |
| Optus | 1,999 | 6.0 | 1.0 | 100% | 11,995 | 0.73 |
| Data Centre | 294 | 25.0 | 1.0 | 80% | 5,878 | 0.36 |
| GPUaaS | 99 | 20.0 | 1.0 | 100% | 1,980 | 0.12 |
| Enterprise Value of the core |
|
|
| 29,932 | 1.81 | 1.81 |
| Net Debt |
|
|
|
| (7,707) | (0.47) |
| Core Business Value |
|
|
|
|
| 1.35 |
Source: Companies, DBS
Regional associates are worth SGD4.12 per share assuming 10% holding company discount on their fair values
| Regional Associates | Total shares | Fair values | Exchange rate | Stake | Value | Per Share (SGD) | Per Share previous (SGD) |
| Bharti Airtel | 5,796 | 2,300.00 | 75.55 | 27.5% | 48,526 | 2.94 | 2.60 |
| AIS | 2,974 | 420.00 | 25.50 | 24.8% | 12,149 | 0.74 | 0.69 |
| Gulf development PCL | 14,940 | 68.00 | 25.50 | 7.7% | 3,068 | 0.19 | 0.19 |
| Globe Telecom | 144 | 2,000.00 | 48.08 | 46.6% | 2,801 | 0.17 | 0.19 |
| Singapore Post | 2,250 | 0.40 | 1 | 21.8% | 196 | 0.01 | 0.01 |
| Netlink NBN | 3,897 | 1.08 | 1 | 24.8% | 1,044 | 0.06 | 0.06 |
| |||||||
12m fwd Profit (SGDmn) | 12-month forward (Dec YE) PER | Exchange rate | Stake | Value (SGD mn) | Per Share (SGD) | Per Share previous (SGD) | |
| Telkomsel | 1,709 | 15 | 1 | 30% | 7,718 | 0.47 | 0.46 |
| Total | 75,501 | 4.57 | 4.21 | ||||
| HoldCo discount | 10% | -7,550 | -0.46 | -0.42 | |||
| Associate Valuation | 67,951 | 4.12 | 3.79 | ||||
| Core business valuation | 1.35 | 1.57 | |||||
| Target Price | 5.46 | 5.36 |
Source: Companies, Visible Alpha, DBS
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