Singtel seeks clarity on taking part in telco consolidation; analysts note ‘very high bar’ for approval

[SINGAPORE] Singtel is “seeking clarification” from the regulators on its ability to participate in the consolidation of Singapore’s telecommunications space, in the wake of news that the proposed sale of M1 to Simba Telecom has collapsed.

“We have always been actively seeking to participate in consolidation,” said Singtel group CEO Yuen Kuan Moon on Thursday (May 21), at the telco’s FY2026 full-year results briefing.

He noted that the group would consider taking part in a market consolidation if regulators give it the green light.

Yuen’s comments followed the Infocomm Media Development Authority’s (IMDA) ​announcement on Monday that it is investigating allegations that Simba used radio frequency bands that had not been assigned to it.

“Of course, if we are able to participate in the consolidation, we will definitely evaluate where the opportunities are, and how we would help lift the industry altogether in Singapore,” said the CEO.

An environment with four telcos, he said, is “definitely not sustainable”.

“As you can see in many other markets, especially in the region, we have seen that even larger markets have consolidated,” he added, citing Thailand, India and Indonesia as examples.

High bar for regulatory approval

OCBC analysts Chu Peng and Ada Lim told The Business Times that the bar for Singtel to receive regulatory approval to bid for M1 is “very high”.

“Even if approval were granted, we believe a domestic telco acquisition may not be strategically compelling at this stage,” they said, adding that a domestic telco doing so “would likely increase leverage and divert capital from higher-priority initiatives”.

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Nirguanan Tiruchelvam, head of consumer and Internet at Aletheia Capital, similarly noted that the chance of Singtel putting its name forward to acquire M1 is “unlikely as the group is looking to diversify from domestic exposure”.

In response to a question on how the company is handling tight competition in Singapore’s telco market, Ng Tian Chong, CEO of Singtel Singapore, noted: “Even though there’s aggression in the market, we focus a lot on differentiating ourselves through our network, as well as customer experience.”

He cited the company’s deliberate effort to differentiate Singtel’s telco services in Singapore into three brands, each catering to different consumer segments.

Potential Reit IPO

The group is considering a potential real estate investment trust (Reit) initial public offering (IPO).

This is part of its strategy to create “permanent capital pools that (Singtel) can continuously tap for longer-term investments”, said Arthur Lang, Singtel group’s chief financial officer.

“This could be in the form of long-term investments, as well as a listing like a Reit, into which we can continue to inject assets,” he added. He said that this approach “enables financial flexibility… strengthens returns and supports long-term value creation”.

Lang said that a potential Reit IPO would not necessarily involve Singtel’s data centre assets, and described it as a possible capital-recycling option available to the group.

He did not provide a timeline for the potential Reit listing.

Potential minority partner in Optus

In a separate statement on Thursday, Singtel said it is open to an Australian partner taking a minority stake in Optus, its wholly owned Australian subsidiary.

This follows an independent review into Optus, which has faced a string of crises in recent years.

Among the recommendations from the probe was for the board to ensure that the CEO and executive team at Optus are equipped to manage the company’s reform.

Singtel has pledged full support for Optus in tackling its underlying problems, and said it was committed to the transformation of the unit. It previously disclosed that it has invested more than A$9.3 billion (S$7.8 billion) in Optus over the last five years.

Yuen said that Australia remains an attractive market because it has only three mobile network operators, making it structurally sustainable if managed well.

However, he acknowledged that Optus “is not where it’s supposed to be today”.

Responding to a question on whether specific market challenges led to this decision, he said the decision to find a local partner was “separate” from any challenges faced.

“Looking for a local partner taking a minority stake in Optus is no different from our strategy and how we operate. We believe in bringing a local partner who’s like-minded.”

FY2026 results

Singtel on Thursday posted a net profit of S$2.2 billion for its second half ended Mar 31, down 20.9 per cent from S$2.8 billion in the year-ago period.

The telco attributed the decline mainly to lower exceptional gains from its India associate, Airtel.

The dip translated into earnings per share (EPS) of S$0.1335, down from S$0.1688 a year earlier.

Excluding exceptional items, the group’s underlying net profit for H2 rose 10.6 per cent to S$1.4 billion, from S$1.3 billion previously.

Revenue came in at S$7.4 billion, up 2.7 per cent year on year from S$7.2 billion.

The board proposed a final ordinary dividend of S$0.103 a share, totalling S$1.7 billion for the financial year ended Mar 31.

This comprises a core dividend of S$0.07 a share and a value realisation dividend of S$0.033 a share, bringing Singtel’s total annual dividend to a record S$0.185 a share.

For FY2026, the group’s net profit rose 39.5 per cent to S$5.6 billion, from S$4 billion the year before.

Singtel’s full-year underlying net profit climbed 12.1 per cent year on year to S$2.8 billion from S$2.5 billion, driven by growth in its regional associates Airtel and AIS, as well as operating companies NCS, Digital InfraCo and Optus. 

Shares of Singtel closed 6.4 per cent or S$0.32 lower at S$4.70 on Thursday.

Additional reporting by Therese Soh