What’s next for Singtel shares?

• Singapore Telecommunications Ltd (SGX: Z74) share price closed at S$2.50 on Wednesday (15 June)
• The group will be transferring the management of the Optus Enterprise division to Australia
• The blue-chip counter is down by 8% in the last one month
• Keen to trade Singtel shares? Open an account with us to long or short the stock.

Singtel stock price: what’s the latest?

Singapore Telecommunications Limited (Singtel) has announced that its Australian subsidiary Optus will directly oversee its Optus Enterprise division with effect from 1 July 2022.

The Straits Times Index constituent, which is down by 8% in the last one month, fell slightly following the announcement. Share price is up by 7.7% on a year-to-date basis.

In terms of outlook, Singtel shares have a consensus rating of ‘outperform’ and an average price target of S$3.15 (equating to a 25.5% upside from its last traded price of S$2.51), based on the latest SGX StockFacts data.

The latest investment thesis came from UOB and RHB’s equity research teams, who reiterated ‘buy’ calls on the stock on 30 May 2022.

UOB kept its price target on Singtel unchanged at S$2.90 a share, while RHB raised its estimate to S$3.55 from S$3.37.

Singtel further decentralises organisational structure

The telco group’s decision to transfer the management of the Optus Enterprise division to Optus comes as part of an ongoing move to further decentralise its organisational structure.

The move will also ‘effectively give Optus more operational autonomy and direct accountability,’ the group said in a press release.

‘Since our strategic reset a year ago, we’ve been evolving our operating model to stay relevant and maximise shareholder returns and this is another step in that direction,’ said Singtel Group CEO, Yuen Kuan Moon.

‘Optus has been part of the Singtel stable for two decades and a leading player in the Australian consumer market. Given the hyper digitalisation that enterprises are currently experiencing, this is also timely as Optus can focus on advancing its growth as a business-to-business (B2B) player,’ he added.

Optus’ enterprise business revenue was A$1.21 billion in the financial year ended March 2022.

The group’s decentralised organisational structure was first adopted in 2021, when its information and communications technology (ICT) arm, National Computer Systems (NCS), was spun off from Singtel’s enterprise business. The move has facilitated the transformation of NCS as well as its regionalisation. NCS has since expanded into Australia.

According to Singtel, NCS has also diversified from its public sector client base and seen digital revenues jump to almost half of overall revenue in the last financial year.

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