---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 210492
conversation_id: 0a21ad1b-6b33-4bec-8026-fb0999d51e13
citations: 6
created: 2026-05-31 19:59:10Z
---

# What’s the bull case bear case for Singtel?

# Singtel (Z74 SG) — Bull Case / Bear Case

**Today's date**: 2026-05-31. Most recent CLSA Singtel-specific notes in scope are dated **22 May 2025** (post-FY25 results); company-published evidence runs through **9MFY26 (Dec 2025)** and the **Q2 FY26 earnings call (11 Nov 2025)**. Latest sell-side stance in coverage: **CLSA OUTPERFORM (O-PF), TP S$4.20**, implying ~4.7% forward dividend yield [6].

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## Bull Case

**1. Capital management is the central re-rating thesis.**
Management announced a new **S$2bn Value Realisation Share Buyback (VRSB)** running to FY28 and **raised its medium-term capital recycling programme from S$6bn to S$9bn** (S$4bn announced as of May 2025) [2]. The recycling pipeline is structured to fund only assets with a lower earnings yield than Group's c.4.5%, so each sale is accretive [2]. CLSA views the S$9bn target as conservative given Singtel still has c.5% of Bharti Airtel (~S$8bn) to trim to "equalise" with the Mittal group [2]. The pillar is a **3-pronged returns framework**: 70–90% core payout, 3–6 ¢/share Value Realisation Dividend (VRD) annually, plus the S$2bn VRSB [14].

**2. Dividend growth is real and tangible.** FY25 DPS came in at **17.0 ¢ (+13% YoY)**, beating the 16.5¢ prior guidance and comprising 12.3¢ core + 4.7¢ VRD [8][11]. **H1 FY26 interim dividend was S$0.082, +17% YoY**, with core payout at 78% of underlying NPAT [12].

**3. Operating businesses are inflecting, not just associates.**
- **Optus**: CLSA *raised* FY26/27 Optus EBIT by **+75% / +88%** vs prior forecasts on better-than-expected price and cost rationalisation [5]; FY25 Optus EBIT jumped from S$256m → **S$389m (+52% YoY)** [8].
- **NCS**: Robust bookings momentum, **+38% EBIT growth** and **S$2.6B in bookings** through 9MFY26 [16].
- **Data centres**: Nxera SG/TH DCs are presold at 50/80% with revenue impact landing in FY27; **Nxera EBITDA targeted to double by FY28** from S$165m FY25 [3][8].
- **Group OpCo EBIT**: 9MFY26 +10% YoY (+12% cc) — management upgraded full-year guidance from "high single digits" to **"between high single digits and low double digits"** [17].

**4. Improving capital efficiency.** ROIC progressing from 5.4% FY25 → modelled **7.2% by FY28**; EVA turns positive in FY28 (S$93m) after years of negative spread [10]. Management targets low double-digit ROIC by FY28 [8].

**5. Cheap stub + S$1.5bn Airtel monetisation already executed (Nov 2025).**
The stub value (Singapore + Australia ex-associates) trades at **c.6x EBITDA** [1]. Singtel sold a 0.8% Airtel stake for **S$1.5bn on 7 Nov 2025**, taking total assets recycled since FY24 to ~S$5.6bn (of the S$9bn target) [13]; the resultant gain is ~S$1.1bn, funding growth investments and capital returns [12].

**6. Associate ballast.** Associates contributed S$2.57bn in FY25 (+89% YoY) — Bharti Airtel is the largest single value driver (45% of NAV, valued at 13x EV/EBITDA) [5][8].

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## Bear Case

**1. Singapore is structurally weakening.**
CLSA *cut* Singtel SG EBIT forecasts by **-15.8% (FY26) / -13.7% (FY27)** on "worse than expected price competition" [5][6]. FY25 Singtel SG revenue fell -2% YoY and missed CLSA estimates by -6% [8]. The Singapore mobile sub base shrunk -2% YoY to 4.54m with ARPU flat at S$24/month [9]. 9MFY26 Singtel Singapore revenue was **-1.9% YoY** with EBITDA -10.7% — meaningfully deteriorating despite group-level positives.

**2. Optus execution risk + regulatory overhang.**
The H1 FY26 outlook now flags **"Optus triple zero outage uncertainties"** as a guidance risk [12]. An independent review (Dr Kerry Schott AO) has been released, and Optus had to overhaul its executive team (CTO/CIO/CSRO) [16]. CLSA explicitly cites "evidence of Optus' growth in Australia being back on track post the cyber hack and network outage incidents" as a *required catalyst* — i.e., the market is still in show-me mode [7].

**3. Soft 4QFY25 print on associates.**
4QFY25 core PATMI of S$600m **missed VA consensus by 19%**; revenue missed by 2%; EBIT missed by 3%; associate contribution missed by 14% (Telkomsel and Globe weak) [9]. Currency drag on Australian Dollar and regional associates was a recurring theme [9].

**4. Yield-stock sensitivity to rates.**
CLSA flags **interest-rate increases as a top risk** because Singtel is held as a yield-centric telecom; 4.7% forward dividend yield is the key support [4][6].

**5. Other identified risks (CLSA risk block).**
- Unfavourable currency movements (Optus revenue translation in particular) [4]
- Decline in enterprise telecom spending — hits NCS / Digital InfraCo investment case [4]
- Irrational price competition in Singtel's markets from newer entrants [4]

**6. Capex is rising, not falling.**
FY26 capex of **S$2.5bn (S$1.7bn core + S$0.8bn growth)**, of which S$1.1bn is for Optus alone [11]. The growth-capex line supports the DC thesis but means free-cash-flow leverage on the dividend depends on the recycling cadence continuing.

**7. Negative EVA today.** Despite improving ROIC trajectory, **economic value-added remains negative through FY27** (-S$254m FY26CL, -S$30m FY27CL) and only crosses positive in FY28 — so the value creation story is back-loaded and dependent on execution [10].

**8. Sum-of-parts dependency on hold-co discount.**
CLSA's SOTP of S$4.20/share embeds a **-25% holding company discount** on a gross S$5.66/share NAV, of which **72% of NAV sits in associates** (Airtel 45%, AIS 12%, Telkomsel 11%, Globe 5%) [5]. Singtel's standalone consolidated operations contribute only 28% of NAV — i.e., the stock partially functions as a leveraged proxy on Indian telecom and Indonesian/Thai consumer wireless.

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## Synthesis — Net View From the Internal Coverage

CLSA's call frames Singtel as an **"executing-the-reset" story**: a soft 4Q on associates is overshadowed by tangible capital returns (S$2bn buyback, raised S$9bn recycling) and a credible operating EBIT trajectory underpinned by Optus turnaround and DC ramp. The asymmetry favors the upside *as long as* (a) Optus growth re-accelerates without further regulatory damage, (b) data centre commissioning lands on schedule in 2026 with full FY27 contribution, and (c) the recycling pipeline keeps clearing low-yielding assets. The principal bear risk is **Singapore retail competition deepening** while the Optus regulatory tail keeps the stock in show-me territory — that's why CLSA only stretched to O-PF rather than BUY, with a +10% TP raise (S$3.80 → S$4.20) [6][8].

---

**Sources**

[1] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285LinqAlpha.PDF — Investment thesis para.
[2] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — Capital management section.
[3] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — FY26 EBIT guidance & cost-out.
[4] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — Investment risks block.
[5] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — SOTP valuation Figure 13/new.
[6] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — TP raise to S$4.20 / 4.7% yield.
[7] *Singtel (Business update first thoughts)* — CLSA (22 May 2025), 607960190LinqAlpha.PDF — Catalysts block.
[8] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — FY25 earnings reconciliation Figure 10.
[9] *Singtel (Business update first thoughts)* — CLSA (22 May 2025), 607960190 — 4Q25 key numbers vs. consensus.
[10] *Singtel – O-PF (All about the capital)* — CLSA (22 May 2025), 607960285 — EVA / ROIC trajectory table.
[11] *Singtel (Business update first thoughts)* — CLSA (22 May 2025), 607960190 — Dividend policy & FY26 capex.
[12] Singapore Telecommunications Ltd., Q2 FY2026 Earnings Call — 11 Nov 2025 — Group CFO commentary on interim div, buyback, Optus outage guidance.
[13] H1FY26 results slides — Singtel (Nov 2025) — Capital management: Airtel 0.8% stake sale S$1.5B; ~S$5.6B of S$9B mid-term target met.
[14] FY25 results slides — Singtel (22 May 2025) — 3-pronged returns framework: core dividend / VRD / VRSB.
[15] Q3 FY26 results slides — Singtel (Feb 2026) — 9MFY26 growth highlights.
[16] Q3 FY26 results slides — Singtel (Feb 2026) — Business highlights: Optus, NCS, Digital InfraCo, capital management.
[17] H1FY26 results slides — Singtel (Nov 2025) — FY26 outlook upgrade to "high single digits to low double digits" OpCo EBIT growth.

## Citations

- [12] **Singapore Telecommunications Ltd., Q2 2026 Earnings Call, 11-November-2025 10** · external
- [13] **H1FY26_slides.pdf** · external
- [14] **FY25-Slides_Final.pdf** · external
- [15] **Singapore Telecommunications Limited, Q3 2026** · external
- [16] **Singapore Telecommunications Limited, Q3 2026** · external
- [17] **H1FY26_slides.pdf** · external

