SINGTEL (SGX:Z74)
SingTel - Gaining Traction In 5G Deployment
Regional 5G standalone (SA) roll-out on track
- Despite setbacks, sales of SingTel (SGX:Z74)’s 5G-equipped phones are as strong as pre-pandemic levels. Regionally, Telkomsel and Airtel have launched commercial 5G services and this should further spark the development of new 5G applications for consumers and enterprises in emerging markets.
- We expect an increasingly competitive landscape as incumbents focus on monetising 5G services and increasing capex for 5G implementation.
Encouraging take-rate for 5G bundle services
- With more than 1,000 5G SA sites across Singapore, SingTel is poised to meet the media authority’s (IMDA) target of 50% population coverage by end-22. Increasing 5G adoption via bundled packages has led to ARPU uplift (+0.3% y-o-y) and helped address dilution from 4G SIM-only plans.
- In Singapore’s recent budget S$200m was earmarked to build digital capabilities for business in coming years. We believe SingTel is well-placed to capitalise on this through its lucrative enterprise business by offering assistance in the development of solutions for a wide range of uses. This initiative, however, will take time to bear fruit.
Strong competition in Australia
- Telstra’s recent partnership with TPG Telecom to increase 5G predict constant dividend at 40-50% of net profit (dividend yield at 4.2%- 5.5%) from FY22E to FY25E.
- Optus has allowed Telstra to regain dominance in the Australia Telco space and would need a game-changer in this competitive market.
Roadmap ahead
- Research by Cisco predicts SingTel’s annual 5G revenue could rise to S$710m (12% of current annual enterprise revenue) by 2025.
- We anticipate key strategic plans for SingTel will include accelerating IoT (Internet of Things) connection via strategic partnerships, leveraging its infrastructure assets (data centres, towers and JVs) to unlock value and drive secular growth by allowing enterprises and startups to incorporate distinctive use cases in their Multi-access Edge Computing (MEC) structures.
- See
- Amid tough and volatile times, we contend that SingTel remains.
Kelvin Tan
Maybank Research
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https://www.maybank-ke.com.sg/
2022-03-16
SGX Stock
Analyst Report
2.980
SAME
2.980
