Singapore Telecommunications Ltd: Can Singtel become a SGD5.00 stock?
- A revival of correlation between the stock price and associates’ market value in the last 1-year suggests a (i) 15% uplift from a potential reduction in HoldCo discount to 10% (ii) 8% uplift from a potential rise in associates’ market value
- Sector consolidation to renew growth in its Singapore telco business in 9-15 months, who contributes ~50% to core EBIT (which excludes associates) and ~10% to Group Profit
- BUY with a higher TP of SGD5.04 (prev SGD4.58); Offers 12% earnings CAGR over FY25-27F with 4.7% yield & buyback support
In the last one-year, we have seen a revival of high correlation between Singtel’s stock price and associate market value after a gap of 7 years. There is a strong correlation between Singtel's share price and the market value of its key associate companies (Bharti Airtel, Advanced Info Services PCL (AIS), Telkom Indonesia (TLKM), and Globe Telecom since June 2024. Historically, from September 2009 to December 2017, this correlation was robust, with Singtel's share price showing a ~69% positive correlation with its associates' market value. This period coincided with Singtel's core business strength, with core EBIT steadily increasing until 3Q18 to SGD768mn. However, as Singtel's Core EBIT steadily declined post-3Q18 due to weak performances in Singapore and Australia, Singtel's share price exhibited a strong correlation with core EBIT at 74%, highlighting core EBIT as a primary driver of the share price instead. This divergence indicated that Singtel’s core operations’ declining performance began to overshadow contributions from its regional investments.
The anticipated turnaround was driven by Singtel's improving core business performance – fuelled by Optus’s ongoing recovery, and growing contributions from its NCS and Data Centre segments and divestments. These factors are poised to strengthen Singtel's core EBIT, which in turn should re-establish the historically strong positive relationship between its share price and the collective market value of its associates.
Bharti, which contributes 53% of Singtel’s valuation, is seeing a continued ARPU rise. Bharti Airtel’s (March YE) Average Revenue Per User (ARPU) continued its upward trajectory, reaching INR250 in 1Q26, representing an 18.5% y/y increase and a 2% q/q growth. This rise reflects the sustained impact of the tariff hikes introduced in July 2024, which improved pricing across key prepaid and postpaid segments. The pricing adjustments were part of Airtel’s broader strategic focus on premiumisation and value-led growth, helping shift the subscriber mix toward higher-yielding users. Bharti explicitly came out with a INR300 ARPU target in December 2019, stating that the Indian telecom industry requires an ARPU of INR300 to ensure a healthy and sustainable business model. Consensus projects that ARPU could climb to INR280 by the end of FY26F, driven by continued migration to higher-value plans, deeper penetration of fixed-mobile convergence (FMC) offerings, and a rational competitive environment. Consensus projects Bharti Airtel’s earnings to grow at a CAGR of 41% over FY25-27F, while projecting a target price of INR2,042 with an upside potential of 5% for the current market price of INR1,941.
Telkomsel, which contributes 11% of our valuation of Singtel, to reap the benefits of sector consolidation from 2H25F. The merger between XL Axiata and Smartfren to form "XLSmart" is set to significantly benefit Telkomsel, currently the dominant mobile, primarily by fostering a more rational competitive environment. With the number of major mobile players consolidating from four to three (Telkomsel, Indosat, and XLSmart), the intense price wars that have historically driven down ARPU are expected to subside, allowing Telkomsel to increase its ARPU and improve profitability. This reduction in competitive pressure will enable Telkomsel to focus more on value-added services, network quality, and digital transformation, rather than solely on aggressive pricing, supporting its strategy of fixed-mobile convergence through businesses such as IndiHome. Hence, we increase our target 12-month forward PE for TLKM to 15x (previously 11.3x), as we expect it to benefit from the consolidation in the sector. We expect Telkomsel earnings to bottom out in FY25F and grow by 8% y/y in FY26F vs consensus expectation of 5% y/y growth in FY26F.
AIS, which contributes 11% of our valuation of Singtel, is seeing growth in ARPU after recovery in 2023. Advanced Info Service PCL (AIS) is expected to grow its blended ARPU, as the company's 2Q25 performance showed a clear upward trend in ARPU, driven by a strategic shift toward value-based offerings and away from price-driven competition. This growth is being achieved primarily through the successful monetisation of its 5G network, where AIS is migrating subscribers to higher-priced plans that offer greater data allowances and bundled digital content. The ongoing recovery of Thailand's tourism sector is also a key factor, as it boosts high-margin international roaming revenue. Furthermore, the company's focus on upselling and cross-selling converged packages, which combine mobile, home broadband, and entertainment services, is increasing average spending per user. The consolidation of the fixed broadband market and AIS's focus on acquiring and retaining high-value customers in both the mobile and fixed segments are collectively creating a more stable and profitable environment that supports sustained ARPU growth. Consensus projects 15% earnings CAGR or AIS for FY25-27F and projects a target price of THB323 for AIS with an upside potential of 12% from the current market price of THB289.
Our FY26F-28F associate pre-tax profits projections in Singtel model are 4%/13% below consensus
SGDmn | DBS | Consensus | DBS vs Consensus | ||||
FY25 | FY26F | FY27F | FY26F | FY27F | FY26F | FY27F | |
Telkomsel | 672 | 853 | 787 | 707 | 755 | 21% | 4% |
Bharti Airtel | 991 | 1,189 | 1,427 | 1,414 | 1,961 | -16% | -27% |
AIS | 411 | 485 | 572 | 469 | 512 | 3% | 12% |
Globe | 269 | 291 | 314 | 320 | 341 | -9% | -8% |
Others, including Netlink and SingPost | 5 | 5 | 5 | (20) | (17) | -125% | -130% |
*Total | 2498 | 2,823 | 3,105 | 2,929 | 3,586 | -4% | -13% |
*Total of the consensus estimates not tallying due to consensus still projecting pre-tax profit from Intouch instead
of the contribution from the new entity - Gulf Development PCL.
Source: Visible Alpha, Companies, DBS
We value Singtel’s core business at 18.5x 12-month forward PER (unchanged) while sector consolidation in Singapore might lead to an upside surprise. Our 12- month forward P/E of 18.5x is at a 5% premium to its peer average of 17.5x, as we project a core earnings CAGR of 10% for Singtel over FY25-28F, vs. peers’ 7% CAGR. Singapore telco contributed over 50% of the core business operating profit, followed by Optus at 27%, NCS at 18% and rest 4-5% by Digital Infrastructure segment last year. While we see a rising competition in Singapore from June to Dec 2025, Singtel should be cushioned by its SGD200m cost savings program this year coupled with its premium mobile user base in Singapore.
Regionally, across markets such as Indonesia (XL Axiata–Smartfren), Australia (TPG–Vodafone Hutchison), and Thailand (True-DTAC), merging operators typically deferred significant mobile plan price increases for roughly 12 months or more following sector consolidation announcements. This delay often stemmed from: (i) commitments made during merger approval processes, (ii) the imperative to retain customers during the sensitive post-merger announcement phase, and (iii) operational priorities like network harmonisation and brand alignment. Such dynamics created a transitional period of stable market pricing, providing competitors a window to consolidate their customer bases without aggressive reaction from a larger, newly merged rival. Should a similar pattern emerge in Singapore post the latest sector consolidation, Singtel could find itself in a strategically advantageous position. Singtel might gain a crucial opportunity to market its premium 5G plans and secure enterprise and high-value consumer contracts, while also repositioning itself as a stable and service-focused alternative.
Merged entities typically take at least 12-24 months to conduct new price hikes post-announcement of the expected merger
Country | Merger | Date of announcement of the merger | Date of first tariff change/hike after merger |
Australia | Merger of TPG and Vodafone Hutchison Australia | Announced in Aug 2018 but approved in May 2020 | January 2023: TPG increased the price of the previous Vodafone 40GB for the AUD40/month plan to AUD45 per month, but this was due to COVID-related delays |
Indonesia | Merger of XL Axiata and Smartfren | May 2024 | March 2025: XL Axiata increased the entry-level starter pack price for XL to IDR35,000 for a 2-3GB quota from IDR10,000 previously, particularly in the Flex XS package |
Thailand | Merger of TRUE and DTAC | November 2021 | May 2023: TRUE raised the price of its THB1,399 package to THB1,499, but also raised the quota of voice call minutes from 450 to 650. DTAC raised the price of the THB349 package with 20GB data and 100 voice minutes to THB399. DTAC also raised the price of the THB1,099 package with “unlimited” data and 200 minutes of voice calls, to THB1,199 but increased the voice call minutes to 350 minutes. |
Source: Australian Competition and Consumer Commission (ACCC), MVNO Services, DBS
Our Singtel’s underlying earnings projections are in line with consensus for FY26F but 6% below consensus in FY27F
SGD mn |
| DBS | Consensus | DBS vs consensus | ||||
2025 | FY26F | FY27F | FY26F | FY27F | FY26F | FY27F |
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Revenue | 14,146 | 14,506 | 14,869 | 14,427 | 14,929 | 1% | 0% |
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Core EBIT | 1,381 | 1,513 | 1,651 | 1,486 | 1,650 | 2% | 0% |
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Associate (pre-tax) | 2,499 | 2,823 | 3,105 | 2,929 | 3,586 | -4% | -13% |
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Underlying earnings | 2,470 | 2,785 | 3,084 | 2,768 | 3,269 | 1% | -6% |
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Source: Visible Alpha, Companies, DBS
Maintain BUY with a higher TP of SGD5.04. We value Singtel’s associates at SGD4.10/share (prev. SGD3.66), assuming a HoldCo discount of 10% (unchanged) using consensus target prices. We increase our target 12-month forward PE for Telkomsel to 15x (previously 11.3x), as we expect TLKM to benefit from the consolidation in the sector. We value Singtel’score business at an 18.5x 12-month forward P/E ratio (unchanged), resulting in a core value of SGD0.94/share (previously SGD0.93). Singtel’s core profit offers a 12% CAGR over FY25-27F vs. the peer average CAGR of 4% over that period. The increase in the value per share of the core business is due to rolling forward of 12-month forward core profit by a month.
Value of the core business in Singapore & Australia is SGD0.94/share
12-month forward Core net profit (SGD mn) | 12-month forward PER (x) | Value (SGD mn) | Per Share (SGD) | |
Core business | 838 | 18.5 | 15,502 | 0.94 |
*Core business includes Singapore and Optus businesses. Singapore businesses include Singtel Singapore, Digital InfraCo, and NCS. Source: Company, DBS
Regional associates are worth SGD4.10 (prev. SGD3.66) per share based on their consensus target prices
| 12-mth Target Price (LCY) | Exchange Rates | Stake | Value (SGD mn) | Per share (SGD) | Per share (SGD) after 10% HoldCo | Previous (SGD) | Previous (SGD) after 10% HoldCo |
Bharti Airtel | 2041.11 | 67.60 | 28.3% | 48,620 | 2.94 | 2.64 | 2.73 | 2.46 |
AIS | 322.60 | 25.17 | 23.3% | 8,880 | 0.54 | 0.48 | 0.48 | 0.43 |
Gulf Development | 60.89 | 25.17 | 7.7% | 2,783 | 0.17 | 0.15 | 0.12 | 0.11 |
Globe | 2337.14 | 44.44 | 46.7% | 3,546 | 0.21 | 0.19 | 0.17 | 0.15 |
SingPost | 0.71 | 1.00 | 21.8% | 349 | 0.02 | 0.02 | 0.02 | 0.02 |
NetLink NBN Trust | 0.98 | 1.00 | 24.8% | 947 | 0.06 | 0.05 | 0.05 | 0.05 |
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Regional Associates | FY26F (March YE) PER | Exchange Rates | Stake | Value (SGD mn) | Per share (SGD) | Per share (SGD) after 10% HoldCo | Previous (SGD) | Previous (SGD) after 10% HoldCo |
Telkomsel | 15.00 | 12754 | 30.1% | 10,305 | 0.62 | 0.56 | 0.49 | 0.44 |
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| Value (SGD mn) | Per share (SGD) | Per share (SGD) after 10% HoldCo | Previous (SGD) | Previous (SGD) after 10% HoldCo |
Associate Valuation |
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| 75,458 | 4.56 | 4.10 | 4.06 | 3.66 |
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Core business valuation |
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| 0.94 |
| 0.93 |
Associate valuation |
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| 4.10 |
| 3.66 |
SINGTEL VALUATION |
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| 5.04 |
| 4.58 |
Source: Companies, DBS
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