---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 163707
conversation_id: e69cbbd5-d22a-43f0-88e9-8682619cac1a
citations: 12
created: 2026-05-31 21:35:36Z
---

# What is Singtel’s core business franchise and the key components of its operating model?

## Singtel (Z74.SG) — Core Business Franchise & Operating Model

Singtel is Southeast Asia's leading communications technology group, organised around **four wholly-owned operating units ("OpCos")** in two home markets, plus a **portfolio of regional telco associates** in higher-growth Asian markets. The framework that ties the pieces together is the **"Singtel28" (ST28) growth plan**, executed via an end-to-end digital infrastructure stack and a disciplined capital management model.

### 1. The Four Operating Units (the Core Franchise)

| OpCo | Geography | Role | FY25 Revenue | FY25 EBIT |
|---|---|---|---|---|
| **Optus** | Australia | Integrated telco (mobile/fixed/enterprise) | S$7.13bn | S$389m |
| **Singtel Singapore** | Singapore | Consumer + Enterprise telco | S$3.81bn | S$832m |
| **NCS** | Asia-Pacific | Digital, cloud & cybersecurity services (growth engine) | combined with DIC: S$3.28bn | combined with DIC: S$262m |
| **Digital InfraCo (Nxera + Paragon + RE:AI)** | Regional | Data centres, platform services, GPU-as-a-Service | (in NCS+DIC line) | (in NCS+DIC line) |

Source: CLSA segmental reconciliation [8].

The four-segment headcount allocation (Sep-24 estimates) confirms the relative scale: Optus ~1,650, Singtel Singapore ~1,000, NCS ~700, Digital InfraCo ~100 personnel groupings used by CLSA in its model [7].

**Profit mix is heavily skewed to Optus and the growth engines, not Singapore consumer.** Management explicitly notes that Singtel Singapore contributes ~20% of Group underlying profit, of which the **consumer business is only ~10%+ of overall Group profit** — a structurally different mix from local pure-play telco peers [4]. Singtel Singapore's **enterprise revenue now exceeds 50% of Singtel Singapore's total revenue** [2], supported by international connectivity for hyperscalers, 5G+ network slicing, subsea cables, dark fibre and "Smart Nation" critical-infrastructure use cases.

#### How each unit operates

- **Optus** — Mobile-led integrated carrier in Australia. FY26 mobile service revenue grew ~4%, with EBIT +23% on postpaid price rises, amaysim sub additions, and MOCN network-sharing revenue. Bears the brunt of compliance / remediation spend [1].
- **Singtel Singapore** — Dual-engine: a price-pressured consumer mobile/broadband business (24 S$/mth ARPU, ~4.5m subs) and a growing B2B Enterprise business winning multi-country contracts >S$300m in CV, leveraging the 700 MHz 5G+ network and subsea cable assets [4].
- **NCS** — Tech-services growth engine across digital resilience, AI adoption and applications modernisation. Revenue +7% with EBIT +30% (ex one-off) in FY26 — i.e., margin-expanding growth — and a 1.2x book-to-bill ratio underpinning forward visibility [1][3].
- **Digital InfraCo (DICo)** — Houses **Nxera** (regional data centres in Singapore, Thailand, Indonesia, Malaysia), **Paragon** orchestration software, and the new **RE:AI** (GPU-as-a-Service) business. DICo revenue +12% YoY in FY26 with EBIT +24% (+54% ex prior-year reservation fees). The DC Tuas facility came online in Jan-2026 and is ~90% contracted [3]. RE:AI generated S$25m revenue from 1MW of deployed capacity over a 2-year pilot.

### 2. The Regional Associates Portfolio

A defining feature of Singtel is that the **majority of NAV sits in listed regional associates**, not in the consolidated OpCos. Per CLSA's SOTP, associates account for **~72% of gross NAV** before holdco discount [9]:

| Associate | Country | Stake | Share of NAV |
|---|---|---|---|
| **Bharti Airtel** | India | ~23% (post divestments to 27.3% economic) | **45%** of gross NAV |
| **AIS** | Thailand | 32% (raised from 23.4% via Intouch/Gulf merger; further +1.4% in FY26) | 12% |
| **Telkomsel** | Indonesia | 30.1% | 11% |
| **Globe** | Philippines | 46.7% | 5% |

Associate dividends are guided at ~**S$1.1bn p.a.**, with FY26 boosted by a further S$700m special dividend collected from AIS/Gulf. Bharti is described as "the most promising for growth prospects in the portfolio" [12].

### 3. The Operating Model — Three Layers

Singtel describes itself as building an **end-to-end digital infrastructure stack** [5], structured in three layers:

1. **Connectivity layer** — terrestrial dark fibre, subsea cables, 5G+ networks across the Singtel OpCos and the associate footprint in Southeast Asia and India.
2. **Digital infrastructure layer** — Nxera regional data centres + the upcoming ~25% stake in **STT GDC** (S$740m equity check into a S$6.6bn KKR-led consortium acquisition, ~81.7% effective equity), kept at 25% so it is equity-accounted not consolidated [5]; with potential India IPO of STT GDC as a near-term value-realisation lever.
3. **AI / services layer** — RE:AI GPU-as-a-Service, Paragon orchestration platform, and NCS managed services and apps modernisation; positioned on "sovereign AI" credibility, NVIDIA chip partnership (including direct-to-chip liquid cooling and GB200), and multi-cloud aggregation capability.

### 4. Capital Management Model

The capital model is as much a part of the franchise as the operating units:

- **ST28 financial targets:** delivered **21% YoY growth in underlying profit** and **10% growth in OpCo EBIT** in FY26, with ROIC hitting **11.1%** — meeting the medium-term low-double-digit ROIC target set in 2023 [1].
- **Asset recycling pipeline:** Prior **S$8bn** asset recycling programme funded 5G + growth initiatives; pipeline expanded to a further **S$9bn** of identified recycling, including partial Bharti Airtel stake sales (1.2% in May-25 for S$1.93bn, 0.8% in Nov-25 for S$1.50bn), Intouch/Gulf merger gain, and the Comcentre property partial sale to Lendlease (S$1.38bn net proceeds) [10][12].
- **Shareholder distributions:** FY26 ordinary DPS of **S$0.185** (+9% YoY, 5th consecutive year of growth) [6], split into a **core dividend** (70–90% of underlying profit payout) plus a **Value Realisation Dividend (VRD)** of 3–6 cents/share through to 2030, on top of a **S$2bn Value Realisation Share Buyback** programme running to FY28 [11]. ~S$200m of buybacks executed and cancelled in FY26 [1].
- **Capex envelope:** FY27 capex guided at **~S$3bn** — S$1.8bn core (flat YoY) + S$1.2bn growth (Nxera DCs + RE:AI build-out, +S$0.5bn YoY); a significant portion of growth capex is pre-funded via customer advances and KKR equity at the Nxera subsidiary level [3].

### 5. Synthesis — Why This Structure

The franchise can be read as **three concentric profit pools wrapped in a capital-recycling holding company**:

1. **Defensive core** — Optus and Singtel Singapore consumer/enterprise generate stable cash flows to fund dividends.
2. **Growth engines** — NCS (services) and Digital InfraCo / Nxera / RE:AI (regional digital infrastructure) drive top-line and margin expansion, increasingly central to the bull case as DC Tuas, regional DCs, and RE:AI scale.
3. **Optionality from associates** — Bharti/AIS/Telkomsel/Globe deliver associate dividend flow (S$1.1bn p.a.) and serve as a stock of monetisable assets to fund growth capex and shareholder returns without operating-leverage risk.

The holdco then closes the loop: recycle slow-growth or non-core assets → redeploy into higher-IRR growth (RE:AI, regional DCs, STT GDC stake) → return surplus via VRD + buyback. CLSA values the group on **SOTP**: DCF for Singapore (WACC 6.6%) and Australia (WACC 7.8%), 1.2x EV/Sales for NCS+DIC, and listed-stake / associate-PE marks for the regional associates, with a 25% holdco discount [9].

---
**Sources**
[1][2][3][4][5][6] Singapore Telecommunications Ltd., Q4 FY2026 Earnings Call, 20-May-2026 (Yuen Kuan Moon, CEO; Arthur Lang, CFO)
[7][8][9][10] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — 607960285LinqAlpha.PDF
[11][12] Singtel (Business update first thoughts), CLSA, 22 May 2025 — 607960190LinqAlpha.PDF

## Citations

- [1] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [2] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [3] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [4] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [5] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [6] **Singapore Telecommunications Ltd., Q4 2026 Earnings Call, 20-May-2026 11** · external
- [7] **607960285LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960285LinqAlpha.PDF>
- [8] **607960285LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960285LinqAlpha.PDF>
- [9] **607960285LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960285LinqAlpha.PDF>
- [10] **607960285LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960285LinqAlpha.PDF>
- [11] **607960190LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960190LinqAlpha.PDF>
- [12] **607960190LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960190LinqAlpha.PDF>

