The median SDS holder now has around 1,360 Singtel SDS — including those bought in 1993 and 1996 at a total cost of around $2,000 and additional loyalty shares equivalent to 40% of their original shareholdings. As at April 1, these SDS are worth around $6,800 — a tidy sum if they are to cash out right away. In addition, over the years, they have also received around $5,000 in cumulative dividends — more than covering the original capital and CPF interest these SDS shareholders would have otherwise received.
On Singtel’s part, these SDS shares account for just over 4% of its share base — not a particularly heavy drag on its trading liquidity, so not likely to have cramped its style as Singtel’s $2 billion share buyback programme is underway.
So, for Singtel, having a streamlined shareholders’ list freed from the CPF rules would help make it easier to undertake certain corporate actions down the road. For example, it is not unthinkable that Singtel may spin off either its enterprise services arm, NCS, for its own listing, so as to unlock more value for shareholders.
The other possible spin-off, of course, is the data centre business in partnership with KKR, which will presumably get bigger with the ongoing acquisition of ST Telemedia Global Data Centres. Instead of giving out cash proceeds from the listings, Singtel may prefer to let shareholders receive a distribution in specie of shares of the spin-off entities. Imagine if CPF had to help manage another, say, 20 NCS shares, instead of just 1,360 Singtel SDS shares for the 615,000 SDS shareholders.
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In 1993, the SDS — and Singtel’s IPO — were offered to much fanfare, as concepts of “asset ownership” and “corporatisation” were very much in vogue then. It was a chance for Singaporeans to own a piece of a national asset, which happens to be a local telecom monopoly. In that pre-Internet era, as Singtel grew as a regional business hub, it was raking it in via its IDD business — essential for the growing number of MNC executives to run their operations across the region, and for local businessmen serving clients overseas.
Flush with cash from the IPO and retained earnings, Singtel was then able to mount an overseas acquisition spree of big chunks of regional mobile operators in the decade to come, which has drastically transformed its business profile to what is seen today.
That said, Singtel did not reach today’s share price via a steady line up. There were years of slumps when it was forced to book impairments from misguided acquisitions in the new-fangled businesses, such as digital advertising.
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Singtel’s current run-up began in May 2024, when the company introduced the ST28 plan that spells out not only how it is becoming more active in capital management, but more pleasingly and as a confidence boost for shareholders, the clear parameters used to determine how much dividends they will receive.
In parallel to capital management, with growth in mobile services slowing, Singtel has committed heavily to mark its turf in new growth areas, specifically, infrastructure and services for the digital economy.
Singtel SDS shareholders helped fund the company’s last big transformation. They have more than made back their returns along the way. As Singtel embarks on a new chapter, they should stay put, wait for their SDS to pop up automatically in their CDP statements, and continue with the ride.
