The Singapore telecommunications sector is witnessing significant consolidation, potentially leading to market price adjustments. Recent mergers and acquisitions are expected to influence the mobile and broadband markets, with mobile network operators maintaining a “high-press” strategy to protect and expand their revenue market share in the short to medium term. RHB has maintained a NEUTRAL sector rating, with Singtel highlighted as the top pick due to its return on invested capital (ROIC) expansion and capital management advantages.
The consolidation trend is seen as a positive development, potentially stabilising the market. However, expectations regarding market price repair vary. Singtel’s strategic positioning in key markets undergoing price adjustments, along with its robust capital management, makes it a standout choice for investors. The company’s focus on ROIC expansion and exposure to markets with pricing opportunities further solidifies its position.
Singtel’s strategic initiatives include a cost-out programme that has already achieved $400m in savings for FY24-25, with a target of $600m by FY26. Additionally, a $2b share buy-back programme over three years is expected to be earnings accretive. The company’s upgraded capital recycling target of $9bn in the mid-term offers further dividend upsides, supported by a strong balance sheet.
As the sector evolves, the impact of these consolidations will be closely monitored, with potential implications for pricing strategies and market dynamics. Singtel’s proactive measures and strategic focus position it well to navigate these changes and capitalise on emerging opportunities.
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