This tranche of shares, equivalent to 2.78% of Gulf Development's total capital, is 36% of what Singtel now owns. On completion of the sale, Singtel's stake in Gulf Development will be reduced from 7.73% to 4.95%.
Mittal notes that there is a 90-day lockup on the remaining stake, which means Singtel will retain a residual position in the near term rather than fully exit.
At Gulf Development's current prices, Singtel's 7.73% stake is worth around $2.8 billion, equivalent to some 4% of Singtel's own market cap - indicating that this is "a modestly sized but non-trivial portfolio asset," says Mittal.
According to the analyst, proceeds from the sale will be partly used for funding growth capex and partly for dividends and buyback programme.
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This sale, when done, will bring the total value realised by Singtel from divestments since April 2024 to around $6.8 billion, versus Singtel’s mid-term asset recycling target of $9 billion by FY2028.
The sale of Gulf Development shares by Singtel, observes Mittal, is similar to what it has been doing at Bharti Airtel, where it has regularly trimmed its stake in the last few years.
Proceeds from the divestments were recycled to fund capital returns and reinvestments into higher-growth digital infrastructure assets such as data centres.
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"While Singtel has not disclosed the specific use of proceeds, this is consistent with management's strategy of unlocking value to fund growth capex for data centre business," says Mittal.
He notes that out of the $1.2 billion growth capex in FY2027, $0.7 billion is already funded by advances paid by customers, with the remaining $0.5 billion potentially funded from this sale.
"This suggests that another $0.5 billion can go towards value realisation dividend and buybacks," says Mittal, noting that Singtel's projected yield of around 4.2%.
Singtel shares traded at $4.31 as at 10.09 am, down 1.15%.
