SINGAPORE – Singtel’s management explained why it believes the telco’s falling share price does not reflect its financial performance and growth prospects, after the issue was raised by a shareholder at its annual general meeting on July 29.
The telco also gave shareholders more details about the growth prospects and long-term viability of its data centre and digital infrastructure arms, and addressed concerns about its Singapore business amid intense competition.
Shares of Singtel closed the day at $4.59, up 1.4 per cent.
Still, the shares have fallen by almost 20 per cent since reaching a high of around $5.20 in March, despite the telco announcing strong financial results and attractive dividends.
Here are the key takeaways from Singtel’s AGM:
Failed market consolidation affected investor sentiment
Singtel cited the collapse of the proposed merger between Simba and M1, which ended short-term hopes of consolidation in Singapore’s competitive telecommunications market, as a key factor weighing on its share price and investor sentiment.
For years, Singapore’s telco industry has been locked in an aggressive price war between Singtel, Starhub, Simba and M1, leading to low average revenue per user in an overly saturated consumer market.
Chief financial officer Arthur Lang said expectations of a consolidation were high and most observers believed a merger between the third- and fourth-largest telcos would have benefitted the industry.
However, the deal was called off on May 21, the same day Singtel announced its results for FY2026, implying a continuation of the status quo: low profitability in a highly saturated market.
Singtel’s shares fell amid the weaker market sentiment, even as the group reported a 40 per cent jump in net profit to $5.6 billion.
Lang added that the Middle East conflict has also had an impact on Singtel’s share price even though the telco was not directly exposed to the crisis, as the company could still be affected through its overseas businesses.
These factors are out of Singtel’s control, he said, but the company is taking cost-management measures to mitigate the pressures from rising external costs and inflation.
He also reiterated that Singtel is well on track with Singtel 28 (ST28), the company’s strategic corporate growth plan launched to drive business performance and smart capital management through 2028.
The telco is looking at options to sell its stakes in India’s telco Bharti Airtel and Thailand’s energy company Gulf Development worth $14 billion, Lang added, but it is not in a hurry to do so as it is already well positioned, with assets amounting to 75 per cent of its $9 billion target already offloaded.
“While we are disappointed with the share price drop after our full-year results, we will control the things that we can and we can assure you that we are laser-focused in executing our ST28 plan,” Lang told shareholders.
Singtel is being “disciplined” in growing its data centre business
Singtel also responded to a shareholder’s question on whether its digital infrastructure and data centre strategy can keep pace with the rapid developments of AI in a constantly evolving landscape.
Group chief executive officer Yuen Kuan Moon said the company will manage its capital expenditure “very carefully”, as data centres are a hugely capital-intensive sector that requires a long timeframe – a minimum of around 10 years from construction to operations – before it can generate returns.
He added that the data centres Singtel is building in Singapore and across South-east Asia are designed to support AI inference, the process by which trained large language models generate responses to users’ prompts. This differs from data centres built primarily to train the models.
Demand for data centres in the region is very high, and the rate of AI adoption also requires data centres to be in closer proximity to their users in order to reduce latency. In meeting this demand, Yuen said the company will adopt a “very disciplined” approach.
It will not commit to building a data centre until it is confident that the demand is real and customers are willing to take up at least 30 per cent to 40 per cent of its capacity. Singtel is also working with regional partners to build data centres in Malaysia, Thailand and Indonesia so that the capex burden can be shared.
In his presentation at the beginning of the AGM, Yuen said that Singtel’s data centre business is forecast to hit over $300 million in earnings before interest, taxes, depreciation and amortisation by 2028, with its assets’ capacity growing to 200 MW.
The telco’s acquisition of ST Telemedia Global Data Centres is expected to be completed in two months’ time, and this addition to its portfolio would position it as the leading data centre player with a global footprint spanning across 12 countries.
Singtel sees “tremendous growth potential” in the Asia-Pacific data centre market, which is the largest market globally but still underserved in terms of data capacity per capita, Yuen noted.
He added that Singtel has not made a decision on a potential real estate investment trust listing of its data centre business since announcing in May that such plans were being explored.
Singapore consumer business still posting “healthy margins”
In response to a question on the difference in performance between Singtel’s consumer and enterprise businesses in Singapore, the telco said that the profit margins of both business segments are “quite comparable”.
Yuen refuted the shareholder’s claim that 90 per cent of the Singapore business’s underlying profit came from the enterprise segment, but noted that the company does not disclose the specific proportion.
Singtel’s enterprise business has seen resilient growth and accounted for over 50 per cent of the telco’s domestic revenue, according to its latest financial results.
In the consumer market, Yuen said Singtel Singapore’s profit margin is healthier and stronger than the rest of its competitors in Singapore, though it continues to face “hyper competition”.
He added that the profit margins of each of Singtel Singapore’s businesses should be benchmarked against industry averages.
A quarter of Singtel SDS holders have sold their shares
Singtel also provided an update on the progress of the phasing out of its special discounted shares (SDS).
As at July 26, around 153,000 SDS holders, or 25 per cent of the cohort, had sold their shares. The sale amounted to around 170 million SDS or 24 per cent of the total SDS held.
SDS holders who have decided to keep their shares will receive a final dividend payout for FY2026 on Aug 19, which will be credited to their CPF Ordinary Accounts.
Should they continue to hold their SDS, the shares would be automatically transferred from their CPF accounts to their individual or designated Central Depository accounts.
They would then receive an interim dividend cash payout in December for the first half of FY2027.
