Singtel's Subsidiary Powerhouse and Strategic Buyback Signal a Compelling Investment Opportunity

In an era of geopolitical uncertainty and shifting consumer preferences, Singapore Telecommunications Limited (Singtel) has positioned itself as a rare blend of defensive stability and growth potential. The company’s FY2025 results, driven by stellar performances from its key subsidiaries—Optus, Bharti Airtel, and AIS—combined with a landmark S$2 billion share buyback program, underscore a compelling investment thesis. This article delves into how Singtel is leveraging regional dominance and shareholder-friendly policies to unlock value in one of the world’s most dynamic telecom markets.

The Subsidiary Engine: Fueling Profit Growth

Singtel’s subsidiaries are the bedrock of its earnings resilience. Let’s break down their contributions:

1. Optus (Australia): Despite a flat 1% revenue growth, Optus delivered a 5.7% rise in full-year earnings by optimizing mobile services and cutting costs. This performance is critical in Australia’s mature telecom market, where Singtel holds a 32% market share.

2. Bharti Airtel (India): Airtel’s nearly doubled quarterly profit—a result of tariff hikes and subscriber growth—contributed a 13% jump in post-tax earnings to Singtel. With India’s telecom market growing at 8% annually, Airtel’s dominance (29% market share) positions it to capitalize on the country’s digital transformation.

3. AIS (Thailand): AIS, Singtel’s partner in Thailand, delivered a 13% pre-tax contribution growth, reflecting strong demand for 5G and enterprise services. Thailand’s telecom sector is expanding at 6%, driven by digital infrastructure investments.

Together, these subsidiaries accounted for over 40% of Singtel’s underlying profit growth. Their performance isn’t just cyclical; it’s structural. Each operates in high-growth markets with entrenched positions, creating a moat against competition.

The Buyback: A Bold Vote of Confidence

Singtel’s announcement of a S$2 billion share buyback program—its first ever—marks a pivotal shift in capital allocation strategy. The buyback, spread over three years, signals management’s belief that shares are undervalued at current levels.

The stock surged to a five-year high of S$3.95 on May 22, 2025, just days after the buyback was announced. This isn’t a coincidence. By reducing shares outstanding, the buyback directly boosts earnings per share (EPS) and enhances returns for remaining shareholders. With Singtel trading at a P/E of 12x versus its five-year average of 14x, the buyback arrives at an opportune time.

Dividend Yield: A Steady Anchor in Volatile Markets

Singtel’s dividend policy reinforces its defensive appeal. The final dividend of S$0.10 per share (totaling S$0.123 annually) represents a 2.1% yield at current prices—a compelling payout in an environment where 10-year government bonds yield just 2.5%.

Critically, this dividend is underpinned by operational strength, not one-off gains. While the S$1.55 billion Comcentre sale boosted FY2025 net profit, underlying profit grew 9%, ensuring dividend sustainability. The introduction of a “Value Realisation Dividend” (3.3 cents per share) further aligns returns with asset recycling proceeds, creating a dual-income stream for investors.

Why Now? Valuation and Market Position

Singtel’s valuation metrics are undemanding:
- P/E Ratio: 12x vs. sector average of 14x.
- EV/EBITDA: 7.5x vs. 9.2x for regional peers.
- Dividend Yield: 2.1% vs. 1.8% for Telstra and 1.5% for Airtel.

The buyback and dividend combo aim to close this valuation gap. Meanwhile, Singtel’s asset-light strategy—focusing on high-margin digital services (cloud, cybersecurity) and infrastructure—positions it to outperform in a slowing economy. For instance, NCS’s Gov+ business, which grew 5% in FY2025, is a prime example of this shift.

Risks and Considerations

No investment is without risk. Geopolitical tensions, particularly in India and Australia, could disrupt operations. Additionally, Singtel’s reliance on one-time gains (e.g., Comcentre sale) has historically skewed earnings. However, the 9% growth in underlying profit suggests this is no flash in the pan.

Conclusion: A Buy Signal Worth Heeding

Singtel’s combination of regional telecom dominance, shareholder-friendly policies, and undemanding valuation creates a compelling risk-reward profile. The buyback and dividend together signal a management that’s both confident in its strategy and committed to returns. With high-growth markets like India and Thailand fueling organic growth, and a P/E below historical averages, this is a stock primed to outperform.

For investors seeking a blend of income, growth, and stability, Singtel is a rare gem. Act now—before the market catches up.