DBS expects blended mobile ARPU in Singapore to bottom out around mid-2026 after years of discounting drove Singtel’s ARPU down from about $38 in 2019 to around $23 in 1HFY2025, with StarHub on a similar trajectory. The analysts see about 10% recovery over the following two to three years, supported by 5G monetisation, better bundling and a more rational promotional environment as the market moves toward three operators.
With mobile penetration already high, DBS say earnings growth will hinge on extracting more value from existing customers rather than adding subscribers, making ARPU-led recovery more supportive of ROIC since margins can improve without a fresh rise in capital spending.
Against that backdrop, DBS expects Singtel’s core business re-rate to the regional average of 7x EV/ebitda from below five times currently. “Singtel offers a 5% core ebitda CAGR over FY2026 to FY2028 (versus ~4% peer average) as Singapore mobile ARPU approaches an inflection and ROIC improves,” wrote the analysts in a Jan 13 note.
DBS values Singtel’s associates at about $4.14 a share after applying a 10% HoldCo discount, with Telkomsel anchored at 15x 12-month forward P/E given ongoing Indonesian consolidation. They project Singtel’s ROIC to climb another 200 basis points by FY2027 to around 12%, driven by regional associate growth, monetisation of Nxera data centres, and divestments worth around $1 billion to $2 billion.
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Based on the projected FY2027 dividend, the stock offers over 4.5% dividend yield with 14% earnings CAGR through fiscal 2028. A full divestment of its Australian unit Optus (at 10% above or below its roughly $7 billion book value) could boost Singtel's ROIC by an additional 600 to 800 basis points, according to DBS’ scenario analysis.
Why Indosat, China Telecom and China Mobile among top picks
The Singapore outlook reflects a broader regional shift in sentiment toward operators that can lift capital efficiency after years of weak pricing and heavy network spending. In several Asian markets, sector consolidation and slower capital expenditure are helping to stabilise ARPU and improve cash returns, which DBS sees as critical for sustaining share price performance.
In Indonesia, DBS reiterates its “buy” call on Indosat Ooredoo Hutchison with a target price of 3,310 rupiah ($0.25), citing improving industry structure and scope for valuation re-rating. The target price is based on 5x 12-month forward EV/ebitda, above the company’s five-year average of about 4.2 times but still below the regional peer average of about 5.8 times. Indosat is currently trading near 4x forward EV/ebitda while offering about 6% ebitda growth from FY2025 to FY2027, translating into roughly 8% earnings growth and a dividend yield of around 5%.
“We project Indosat’s ROIC to rise to ~12% in FY2026 (versus ~10% in FY2025), equally driven by rising mobile ARPU and divestment. Recent divestment of its fibre assets at a valuation of 14.tn rupiah (US$871 million) might reduce its invested capital by ~10% to uplift its ROIC by 100 basis points,” wrote the analysts.
In China, DBS maintains its “buy” call on both China Telecom and China Mobile, pointing to improving earnings quality as revenue shifts toward enterprise, cloud and industrial digital services, while capital expenditure trends lower after the peak of 5G rollouts.
DBS’s analysts set a target price of HK$7.10 for China Telecom, based on 16x FY2026 P/E. “This represents a 15% premium to regional telco peers, justified by its higher AI and data centre revenue contribution and direct exposure to China’s nationwide AI development,” explain the analysts.
They expect China Telecom to lift its dividend payout ratio to 75% by FY2026 and ROIC rise by about 90 basis points to 10% in FY2026, with earnings growth of about 6.2%, the highest among its local peers.
For China Mobile, DBS pegs a target price of HK$110 based on 14x FY2026 P/E in line with regional peers. The analysts note that the telco has committed to increasing its dividend payout ratio to 75% by FY2026 amidst a declining capex trend. As of the end of 1HFY2025, it had a robust net cash position of RMB252 billion, and currently offers an attractive dividend yield of 7% while also conducting buybacks. Analysts project China Mobile’s ROIC to rise by about 80 basis points to 12.3% in FY2026 as capex continues to ease.
In Thailand, where the True and DTAC merger has reshaped the market into a duopoly, DBS says pricing discipline is already translating into higher mobile ARPU and improving margins, while enterprise data services and data centre connectivity are emerging as the next leg of growth.
The analysts expect sustained ARPU recovery supported by 5G monetisation and value-based bundling, alongside rising enterprise demand linked to industrial digitalisation. This reinforces their view that operators with stronger capital efficiency and diversified revenue streams are best positioned as the regional telecom sector shifts from expansion to optimisation.
As at 2.43 pm, shares in Singtel are trading 1 cent lower or 0.22% down at $4.49.
