Singtel: Nxera on track to double EBITDA by end-2028

Singtel: Nxera on track to double EBITDA by end-2028

Singapore Telecommunications (Singtel) is poised to double its earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2028, according to a recent report by RHB Investment Bank [1]. The financial services company's digital infrastructure arm, Nxera, is expected to play a pivotal role in this growth trajectory.

Nxera's expansion is centered around building and monetizing hyperscale, AI-ready data center capacity across Asia. The company's strategic partnerships and investments are driving this growth. For instance, the joint venture with Telekom Malaysia in Iskandar Puteri, Johor, is on track to deliver 64MW of AI-ready data center capacity by the fourth quarter of 2026. Similarly, the 35% joint venture with Gulf Energy and Advanced Info Service in Thailand has already seen 80% of its DC capacity pre-sold ahead of its June 2025 launch.

Singtel's data center in Tuas, Singapore, is another key project. Expected to be commissioned in January 2026, this 58MW facility features liquid cooling and access to Nvidia's latest GPUs, offering AI/GPU-as-a-service capabilities. By the end of 2026, Singtel aims to have 200MW of DC capacity operational, with a longer-term ambition of 400MW by 2028.

The report projects that Nxera's EBITDA will grow at a 29.8% compound annual growth rate (CAGR) between FY26 and FY28, accounting for approximately 6% of group EBITDA by FY28. This significant growth is driven by the increasing demand for AI and data center services across Asia.

Singtel's disciplined capital recycling strategy is also a key factor contributing to this growth. The company's 28.3% holding in Airtel is currently worth over SGD 48 billion (~69% of Singtel’s market capitalization). Singtel plans to progressively reduce this stake to match the Mittal family’s 23% level, potentially unlocking more than SGD 8 billion (53 cents per share) in cash.

The report also highlights Singtel's strong ESG performance. The company has made significant progress in emissions reduction and renewable energy adoption. Scope 1 and 2 emissions fell by 30.5% from the 2015 baseline, surpassing the FY25 target of a 25% reduction. In FY25, 20.4% of electricity consumption was backed by renewables, up from 9.3% in FY24.

Risks to monitor include intensified mobile market competition, potential earnings volatility, and SGD currency weakness. However, Singtel's diversified regional footprint and strong balance sheet provide resilience.

In conclusion, Singtel's ambitious expansion in digital infrastructure, disciplined capital recycling, and leading ESG credentials position it as an outstanding investment in Asia's telecommunications and data economy. With robust financials, growing dividends, and a clear path to value creation from its data center and associate stakes, Singtel stands out as a compelling long-term opportunity for investors seeking sustained growth and income in the region's digital future.

References:
[1] https://www.minichart.com.sg/2025/07/22/singtel-stock-analysis-2025-target-price-esg-score-nxera-data-centre-growth-outlook/