“That said, we remain constructive on Singtel’s longer-term outlook. Singtel’s openness to an Australian partner taking a meaningful minority stake in Optus points to potential value realisation through monetisation,” says Chu Peng of OCBC Group Research, referring to Singtel’s separate announcement on the same day that it is looking for a minority stake partner for its Australia unit. “We believe Singtel’s growth opportunities in AI and data centres, alongside monetisation optionality, remain intact and should continue to support earnings growth and shareholder returns over time,” adds Chu, who has kept her “buy” call and $5.75 fair value.
When asked, Singtel would not indicate if it is looking for a financial investor cum minority partner to help tack a market value to Optus — estimated by some analysts to be around $16 billion — or an operations partner to build a more reliable network after a series of operational issues in the past year. The sole criterion is that the partner has to be Australian.
CEO Yuen Kuan Moon says the move to seek a local partner is an indication of Singtel’s commitment to the Australian market. He notes that Singtel’s overseas track record has always been one of strong partnerships with local partners in their respective markets. “We believe in the market. There are only three operators in Australia. It is a structure that is sustainable,” he says.
Higher dividends, ongoing buybacks
If there is a reason for investors to hold on to Singtel, it is the prospect of higher dividends. For the whole of FY2026, Singtel will pay a total of 18.5 cents, yielding around 4%. In contrast, Singtel paid a total of 17 cents in FY2025, a significant improvement from just 7.5 cents in FY2021.
Yuen points out that Singtel has increased its dividend over the past five years and the intention is to raise the payout on a sustainable basis. “Definitely, we want to continue to grow our profits, and naturally, based on our dividend policy, dividends will also see steady growth,” he says.
See also: Marco Polo Marine unlocks value with RTO, new business segment on the cards
Under its existing dividend policy, Singtel will pay out between 70 and 90% of its underlying profit as ordinary dividends. For FY2026, the payout ratio is 80% — right in the middle of the range. In addition, there is a standing guidance to pay between 3 and 6 cents in so-called value realisation dividend, which is the balance of divestment proceeds after capex commitments. And for FY2026, 5.1 cents in Value Realisation Dividend (VRD) will be paid, which is close to but below the upper limit of six cents.
Thus, if the coming years see additional earnings volatility, Singtel will still have the headroom to pay more dividends from both the underlying profit and the VRD portions, points out CFO Arthur Lang. “We are not maxing out everything, because, as we said, we want to grow our dividend on a sustainable basis. Our underlying profit this year is growing by 12%. So, when we start to grow our underlying profit, that 70 to 90% of an absolute number will grow,” says Lang.
Citing the growing underlying profit and additional gains from asset monetisation, a team of HSBC analysts led by Piyush Choudhary expects the payout for FY2027 to increase by 8% y-o-y to 20 cents, then by another 8% y-o-y to 21.5 cents the following year, and to a further 23.3 cents for FY2029. Further support will come from the ongoing $2 billion share buyback programme. Up to April 20, some $226 million had been spent on buybacks. Most recently, 3.3 million shares were repurchased on May 26 at between $4.49 and $4.53.
See also: Revenue-sharing to ‘structurally accelerate’ DPU growth for Parkway Life REIT: DBS
Singtel’s prospects have caught the eye of certain institutional investors as well. On May 6, the Capital Group paid $4.67 each for more than 19.3 million shares, thereby emerging as a substantial shareholder with a stake of nearly 838 million shares, equivalent to 5.1%. This makes the US asset manager the second-largest shareholder after Temasek, which controls around half of the company.
Airtel lift, India platform
Sachin Mittal of DBS Group Research has a different reason to turn more positive on Singtel: the potentially higher value of Bharti Airtel, Singtel’s associate in India, because of possible increases in local mobile tariffs. Airtel, despite a smaller market share, offers higher-value offerings than the competition. Previous price hikes have benefitted Airtel more in terms of revenue share. Jio, the market leader by revenue share, is reportedly set to launch its IPO by the end of the year, and it has an interest in charging higher tariffs as well. Airtel, previously fetching a consensus value of INR2,000 ($26.70) per share, is now seen to be worth INR2,300 per share, according to Mittal. With Airtel alone accounting for 49% of Singtel’s entire group’s value, Mittal figures that Singtel is worth $5.46, up from $5.36.
Singtel is likely to see additional capital markets activity in India. The company, in a 25-75 partnership with KKR, is in the midst of acquiring the remaining 82% of STT Global Data Centre (STT GDC) for an enterprise value of $13.8 billion. To fund its share of the deal, Singtel is to cough up $740 million. The deal is expected to close by the end of the year, and Singtel is already identifying ways to recycle its capital to meet its commitment. According to Lang, STT GDC has publicly indicated plans to list its India business in India. “Even with the Hormuz crisis today, Indian IPO valuations are actually very, very strong. So if we do that, it allows us to recycle some of that capital and also have an India platform,” he says.
Meanwhile, the acquisition will give Singtel a big leg up with another large data centre platform from which it can drive further growth in its digital infrastructure business. STT GDC, as of now, is in the “high growth” phase, with significant investments in new data centre capacity, and therefore not profitable at the net profit level. However, judging from the pipeline of projects under construction across more than a dozen markets, there’s an acceleration in data centres going operational, which means improvements in ebitda and ebit will show up in the next three to four years, says Lang.
Not building ahead of demand
Aside from the STT GDC acquisition, Singtel already has a growing suite of data centre offerings. Its Digital Infraco, which includes the data centre operations Nxera, managed to increase its ebit by 24% in FY2026 to $81 million, with revenue up 12% to $486 million. In February, Singtel opened its 58MW high-density data centre in Tuas, bringing its total data centre capacity in Singapore to 120MW, with more than 90% of the capacity already committed before launch.
Adjacent to Nxera is Singtel’s GPU-as-a-service business, marketed under the RE:AI brand. This is one bright spot that could bloom further. Essentially, Singtel will lease capacity on Nvidia-powered servers to users who are not committing to their own hefty capex, or who have temporary spikes and therefore prefer leasing rather than buying.
For RE:AI, Singtel has already spent $60 million in a pilot over the past year to build up 1MW of capacity. Some $25 million in revenue has been generated in FY2026. Singtel plans to ramp this up meaningfully by spending $600 million over the next three to five years, to deploy up to 11MW of capacity in the current FY2027 alone. To put this into perspective, this will be the largest GPU cluster in Singapore “by far”. More than 80% of the target capacity has already been contracted, securing ebit margins comparable to those achieved by Nxera’s data centres, which are run separately. “Rest assured, we are not building ahead of demand. This is just the beginning,” says Lang.
Mittal of DBS estimates that Singtel can generate some $275 million in revenue from this segment in FY2028, along with ebitda of $165 million and ebit of $55 million. For Hussaini Saifee of Maybank Securities, Singtel’s offering of such a service clearly marks its spot as a big player in a bigger trend. “AI demand trends remain exceptionally strong, and Singtel is emerging as one of the few listed AI infrastructure plays in Asean through its growing exposure to RE:AI, sovereign AI workloads, data centres and AI-enabled connectivity infrastructure,” he says.
