Broker: CGS International
Date: July 18, 2024

Overview

Singtel is strategically optimizing its exposure to Thailand through its investments in the telecommunications sector. The company holds a significant stake in key entities in the region and is carefully assessing its options to maximize shareholder value.

Thailand Exposure and Intouch-Gulf Amalgamation

Singtel currently holds a 9% stake in a newly formed entity (NewCo) following the amalgamation of Intouch Holdings and Gulf Energy Development. This strategic consolidation is expected to give Singtel greater flexibility in managing its investments in Thailand. The company can either monetize its stake in NewCo or continue its involvement, depending on future market conditions and opportunities.

Potential Acquisition of AIS Stake

While Singtel has the opportunity to increase its stake in Advanced Info Service (AIS), it is deemed unlikely that the company will pursue the acquisition of the maximum 10% AIS stake. This is due to the discounted offer price, which stands at approximately a 2% discount to the previous closing price. Singtel appears to be cautious about making further investments under these terms.

Dividend Policy

Despite the potential investment opportunities in AIS, Singtel has maintained its dividend payout policy for the foreseeable future. The company’s forecast for fiscal years 2025 and 2026 remains unchanged, with dividends per share (DPS) expected to be 17 and 19 Singapore cents, respectively. Any potential AIS stake acquisition is expected to be funded by cash and asset recycling, rather than impacting the company’s dividend policy.

Conclusion

Singtel is strategically positioning itself in the Thai market with the flexibility to either capitalize on its investment in NewCo or continue to grow its stake. The company’s prudent financial management ensures that its dividend policy remains stable, while potential growth opportunities in the region are carefully evaluated.