The Great Unlocking?

Research evidence excerpt

The Great Unlocking?

Asia Pacific InsightM

Executive Summary

Asian telecoms – entering a new era

Asian telecoms are transitioning from a decade defined by network rollouts,

spectrum bidding, market share competition, and dividend defensiveness into one

where capital allocation is the priority.

We see three converging forces driving the next leg of value creation:

1. Asset monetisation

2. Industry consolidation

3. Emergence of AI infrastructure

Singtel leading the trend, with wide-ranging implications

across Asia-Pacific

Events and announcements across the Singaporean and Australian telcos space prompt us

to analyse three potential areas of corporate action in this report, with Singtel at its core.

As background, since the start of its strategic reset, Singtel has been divesting assets

which have been a drag on ROIC or caused its valuation to be underappreciated, and now

has announced its intention to partially sell its Australian business Optus [link] along with

an stated interest in industry consolidation. Keppel has recently seen a potential sale of

M1 to TUA hit regulatory issues, but has stated it will continue to look for a buyer [link]. AI

infrastructure monetisation is increasing across Asia, thus we consider how Singtel could

unlock value from its AI infrastructure assets using NetLink trust and Keppel DC REIT as

comparable examples [link]

On this basis, we examine three potential corporate actions, which we consider

underappreciated, as we believe the market has not priced them into Singtel’s stock:

1. Optus monetisation – Benchmarking against Telstra and TPG, we estimate

Optus’s EV at ~S$12.4–16.5bn. A 10–30% stake sale could unlock 2–6% of Singtel

SOTP and free S$1.5–4.4bn of capital for redeployment. Singtel management has