The Simba-M1 consolidation will scale Simba to be on par with StarHub, reducing the incentive to keep undercutting rivals. “Scale reduces incentive to price compete as it serves to weigh down on a company’s overall revenue momentum. The logical move based on game theory is to take a more cooperative stance on price competition,” Pineda wrote in his Aug 11 note.
Although market repair toward higher price points would benefit all telco players, Pineda believes StarHub stands to gain most given its heavier reliance on Singapore, where mobile accounts for about 29% of revenue.
He maintains his “buy” rating on StarHub with a target price of $1.43, based on a 7.1-cent dividend per share (DPS) and a 5% yield. “We estimate StarHub would trade at 7.2 times FY2025 ev/ebitda which remains at a discount to its long-run average multiple of 8.6 times,” he wrote.
Singtel is also poised to benefit even though its broader footprint — spanning Australia, Indonesia, India, Thailand and the Philippines — means the uplift will be smaller. Pineda keeps his “buy” call with a $4.46 fair value, citing the group’s mix of steady cash flow from developed markets and growth from emerging markets, alongside potential value from a strategic review of assets. Singtel’s strong cash generation supports a 5% dividend yield, he adds.
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A team of HSBC Global Research analysts, led by Piyush Choudhary, echoed the bullish view. They maintain their “buy” call on Singtel at the same target price of $4.45.
“We think there is upside risk to our forecasts for Singtel’s Singapore FY2027 mobile service revenue, if the regulator approves the [Simba-M1] transaction,” wrote the analysts in an Aug 11 note. They estimated that a 5% increase over current projections would lift edbitda and net profit by 1.2% and 1.4%, respectively, compared with their baseline forecast of 2% growth in mobile service revenue for FY2027.
HSBC forecasts Singtel’s ebit growth over FY2025 to FY2028 to average 10% annually, reaching $1.8 billion by FY2028, driven by rising mobile revenue at Optus, cost optimisation in Singapore and Australia, and growth in NCS and data centres. It also expects ebit growth in FY2027 to be driven by doubling of data centre capacity in Singapore to 120 megawatts (MW).
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Dividends are projected to rise alongside core earnings and additional payouts from value realisation dividend’ (VRD) from asset monetisation initiatives. “We forecast DPS to rise by 3% y-o-y in FY2026 to 17.5 cents and 3% y-o-y in FY2027 to 18.0 cents,” note the HSBC analysts.
Shares in StarHub closed at $1.18 while Singtel's closed at $3.92.
