Tighter competition couldn't hurt Singtel's Singapore and Australia operations: Moody's

But it could face risks if its leverage metrics sustain weakness.

Singtel could sustain its stability as its Singapore and Australia operations fared well despite tight competition, Moody’s Investors service said. The firm’s outlook could also be bolstered by continued stable leverage and good liquidity.

Moreover, Moody’s thinks that Singtel's fundamental credit strength could be uplifted if overall profitability improves, paired with an absolute reduction in borrowings.

However, Singtel could face risks if its leverage metrics continue to weaken, Moody’s noted.

“Downward pressure could also result if the company undertakes further material capital returns in the near term, especially in conjunction with a cash/debt-funded acquisition,” they added.

In addition, industry developments that materially undermine Singtel's relationship with the government could also exert risks for the telco firm.

Also read: Singtel Q1 profits down 6.55% to $831.5m

In Q1, Singtel’s profits fell by 6.55% to $831.5m from $889.8m in the same period last year whilst revenue inched down by 0.5% YoY to $4.13b from $4.16b.