Singapore Telecommunications (Z74) Investor Day 2024 summary

Strategic transformation and future direction

• Singtel28 strategy emphasizes sustained value realization, operational improvements, smart capital management, and enterprise expansion, building on a multi-year transformation and capital recycling program.

• AI adoption is expected to transform all business aspects, driving revenue growth and cost optimization, with productivity improvements of 10%-20% possible at scale.

• The company has exited low-margin businesses, restructured operations, and is leveraging its 5G network, data centers, and enterprise relationships for high-quality revenue growth.

• Regional associates like Globe and AIS are focusing on fixed broadband, market consolidation, digital transformation, and delivering strong revenue and profit growth.

• Capital partnerships, such as with KKR, are funding growth in data centers and other capital-intensive areas.

Financial performance and guidance

• Singtel reported Q1 FY25 operating revenue of S$3.4B, with underlying net profit up 5% to S$603M and net profit up 43% to S$690M, supported by Optus and NCS performance.

• EBIT is guided to grow at high single digits to low double digits over the next few years, with a focus on enterprise expansion, Nxera EBITDA doubling, and NCS margin expansion.

• Value Realization Dividend (VRD) is targeted at SGD 0.03–0.06 per share, funded by SGD 6 billion in asset recycling over five years; payout depends on asset monetization, growth investments, and debt profile.

• Share price has increased 22% since the Singtel28 announcement, with a dividend yield of 5.5%-6% expected to be sustained.

• Optus maintains a 31% mobile customer share in Australia, with c.$8.1B revenue and c.$2.1B EBITDA, and is executing cost and efficiency programs to offset market headwinds.

Business developments and growth engines

• Enterprise business is a key profit driver, with focus on digitalization, cloud, and GenAI adoption across Singtel, Optus, and NCS.

• Nxera aims to scale to over 200MW operational capacity by 2026 and double EBITDA by 2028, leveraging green, AI-ready infrastructure and regional partnerships.

• NCS leads in Singapore and Southeast Asia, with over 51% of FY24 revenue from digital, data, cloud, platforms, and cyber services, and is targeting larger markets and higher-margin digital business.

• 5G enterprise revenue is expected to contribute up to 10% of total revenue, providing a meaningful, sticky, and growing segment as consumer mobile revenue tapers.

• Partnership with Hitachi is an MOU for upstream support in data center development across the region, not limited to Japan.