Singtel to post 3-year earnings CAGR of 15%

This is on the back of the company's 5G businesses in SG and Australia.

Singtel will likely post a three-year (FY22-25F) earnings compound annual growth rate (CAGR) of 15%, a rebound from the -12% it recorded during the COVID-19 period (FY19-22).

In a report, UOB kay Hian cited four factors behind Singtel's improved performance and the first of which is the company's monetisation of Singtel's 5G business in Singapore and Australia.

"Singapore’s 5G consumers are currently being offered, on a bundled basis (connectivity, entertainment, handset), the XO Plus plan. Singtel is also starting to commercialise 5G enterprise applications, particularly in advanced manufacturing processes," the analyst said.

Apart from its 5G business, Singtel's data centres will also aid the company financially. Currently, Singtel has seven data centres in Singapore with 70MW capacity.

Over the next three to five years, Singtel said it will add another 100MW of capacity to its data centre portfolio.

"This will create a DC asset close to S$7-8b within five years," said UOB kay Hian.

In FY23, the company is also expected to announce its data centre partnership with Thailand and Indonesia.

Expansion of assets is not the only way for Singtel to gain, according to UOB Kay Hian, adding that the company will also benefit from the divestment of its wholly-owned subsidiary, Amobee, in the next 12 months.

In FY22, Amobee recorded an operating loss of $70m.

Lastly, UOB Kay Hian said inflationary pressures will also bode well for Singtel in the sense that its subsidiary Optus was able to increase its prices.

Together the four factors will "pave the way for Singtel to narrow its holding company discount," said UOB Kay Hian.