SINGAPORE – Singaporeans who are still undecided about whether to sell their Singtel special discounted shares (SDS) for cash may have been rattled by the recent performance of the telco’s stock.
Since it announced on May 21 its results for the financial year ended March 31, 2026, the telco has seen its share price plunge 13.3 per cent so far, with the stock falling to $4.35 by midday on May 28.
Singtel’s shares fell more than 6 per cent on May 21 alone – with the counter falling from $5.02 to $4.70, more than any single session during the Covid-19 pandemic.
The stock’s sharp price movements could have implications for Singtel SDS holders who have yet to sell their shares.
Singtel and the Central Provident Fund (CPF) announced on April 7 that all Singtel SDS would be transferred from the CPF Board to The Central Depository accounts of SDS holders by November 21, enabling them to hold and manage their shares directly.
At the time, Singtel shares were worth $5 each, meaning that the median Singtel SDS holder with around 1,360 shares would receive $6,800 in total should they decide to sell all their shares.
Selling the SDS at the current market price of $4.35 however, would fetch the median SDS holder $927.50 less, or $5,872.50.
But analysts said the current weakness in Singtel’s share price is likely temporary, and that the telco still has room for growth if it can navigate the challenges ahead. For SDS holders, this suggests there may be no need to rush into selling their shares for now.
Here’s what SDS holders who still own Singtel shares should consider about what the future may hold for the telco before deciding what to do with their shares.
One key reason for the steep drop in Singtel’s share price is weaker investor sentiment after the telco turned more cautious on its outlook for the April 1, 2026 to March 31, 2027 financial year.
The telco said it expects earnings before interest and taxes to grow between “low and mid-single digits” for the period due to uncertainty stemming from the Middle East conflict.
While the Group’s direct exposure to the crisis is limited as it does not have any operations in the Middle East, its key markets such as Thailand and the Philippines are net energy importers and susceptible to global energy price volatility, it said. This could weigh on demand and put pressure on business.
Meanwhile, amidst the geopolitical uncertainty, Singtel also plans to deploy $3 billion in capital expenditure (capex) for long-term assets in the current financial year, up from $2.5 billion the previous year.
This could potentially impact dividends going forward, said Mr Hussaini Saifee, an analyst at Maybank Securities. “Investors are possibly worried that capex levels may remain elevated for longer, which in turn reduces Singtel’s ability to raise dividends,” he said.
Ms Chu Peng of OCBC Bank said the fall in Singtel’s share price likely reflects investor disappointment over the lack of upgrades to the telco’s asset monetisation targets and share buyback programme.
In April 2024, Singtel announced a target to offload $6 billion worth of assets under a five-year digital transformation plan called Singtel28. This was later expanded to $9 billion at its FY2025 results briefing. But the plan has since remained unchanged, despite Singtel already surpassing half of the target.
The telco is also using proceeds from the $9 billion asset monetisation plan to fund a separate $2 billion programme to buy back its own shares, further raising concerns among investors that less capital may ultimately be available for dividend increases.
As part of its Singtel28 strategy, Singtel has ramped up investments in digital infrastructure such as data centres, cloud systems and artificial intelligence (AI) as it seeks to evolve beyond a telco operator into a global digital infrastructure powerhouse.
Of the $3 billion planned for its FY2027 capex, $1.2 billion will primarily be invested in AI, data centres, as well as equipment and fit-outs for GPU-as-a-Service facilities. This allows users to rent cloud access to high-performance graphics processing units (GPUs) for demanding AI and machine learning-related tasks.
Its digital infrastructure unit Digital InfraCo as well as its technology services subsidiary NCS reported revenue growth of 12 per cent and 7 per cent, respectively, for FY2026, on the back of increased demand for AI and data-related services.
Meanwhile, Singtel’s data centre business Nxera grew 16 per cent as more customers used its data centres and adopted its AI cloud platform.
The telco is betting big on AI, with plans to set up the largest GPU cluster in Singapore to power advanced data centres and scale this business regionally.
In the future, its infrastructure would also serve as a platform to support autonomous vehicles and AI robotics, Singtel said.
It has already secured $600 million worth of long-term AI-related contracts spanning three to five years, and intends to spend up to $600 million in capital expenditure for FY2027 – around 10 times the amount spent in the last financial year.
Still, Singtel’s AI-driven ambitions are highly energy-intensive and could face challenges if the prolonged Middle East conflict disrupts global energy supplies and pushes up power costs.
Nxera chief executive Bill Chang said at Singtel’s results briefing that the company has shielded itself from most of the near-term shocks by having established strategic partnerships with energy companies. It will also expand its focus on renewable energy sources to further increase its energy resilience.
Singtel Group’s chief executive Yuen Kuan Moon added the company’s priority as a data centre operator is to secure reliable energy sources.
Other risks to Singtel’s digital infrastructure push include the large amount of capital required and the long time needed for returns to materialise, analysts said.
“These could weigh on Singtel’s near-term earnings visibility and dividend headroom if not carefully managed,” said OCBC’s Ms Chu.
Rapid evolution in next-generation GPUs could also create a risk of obsolescence if operators fail to secure long-term customer contracts and continuously refresh infrastructure, said Mr Saifee.
Singtel could face some headwinds abroad, too.
Potential fines levied on its Australia telco Optus as a result of a September 2025 network outage, which left some users unable to make emergency calls and was later linked to several deaths, could affect Singtel in the new financial year, said Mr Saifee.
Optus could also face delays to its restructuring plans. On May 21, Singtel announced that it is looking for a local partner that can complement Singtel with its expertise in running Optus in Australia.
Despite the near-term volatility and uncertainty, analysts agreed that Singtel is taking the right steps for the future with its digital infrastructure strategy.
For SDS holders who have yet to sell their shares, this suggests there could still be further upside for Singtel in the months ahead.
Mr Saifee said Singtel’s strong track record in developing and operating data centres, along with its ability to secure tenants for 80 per cent to 90 per cent of capacity before operations begin, underscores strong demand for its business.
In the longer term, Singtel’s wireless network infrastructure could also become an important enabler if physical AI applications such as robotics and autonomous vehicles scale meaningfully, he added.
Ms Chu said Singtel’s main advantage is its telecom network and strong relationships with business customers, which allow it to bundle services such as internet connectivity, cloud computing and AI into a single offering.
This end-to-end ecosystem offers a differentiated value proposition that pure-play data centre operators may find difficult to replicate.
Hence, while near-term volatility may persist, she remained positive on Singtel’s longer-term outlook, noting that the recent share price pullback does not reflect any structural weakness in the business.
In his note on May 22, HSBC’s head of Asia telecoms Piyush Choudhary reiterated a buy rating for Singtel’s stock. He forecast an “upbeat” outlook for Singtel’s dividends, expecting them to rise 8 per cent year on year in FY2027 to 20 cents, and another 8 per cent year on year to 21.5 cents in FY2028.
But he cut the bank’s forecast for Singtel’s target share price by 2 per cent to $5.40, citing weaknesses in the Singapore business and foreign currency exchange.
Meanwhile, CGS International’s Prem Jearajasingam maintained the firm’s ‘add’ rating for Singtel’s stock with a target price of $5.34.
Singtel’s shares hit an all-time high of $5.21 on March 20.
