What’s next for Singtel shares?

• Singapore Telecommunications Ltd (SGX: Z74) share price closed at S$2.56 on Wednesday (3 August 2022)
• Two of the group’s foreign associates signed new agreements this week
• Analysts have an average price target of S$3.18 on the telco’s shares
• Keen to trade Singtel shares? Open an account with us to start today.

Singtel’s overseas subsidiaries sign new agreements

Singtel shares rallied 2% earlier this week, after two of its overseas subsidiaries entered into new agreements.

Its Indian telcommunications associate, Bharti Airtel, said that it has acquired 19,800 MHz of 5G spectrum via a pan India footprint of 3.5 GHz and 26 GHz bands.

The spectrum, which was purchased for a total consideration of 430.8 billion rupees (S$7.5 billion) via an auction conducted by the Department of Telecom, has a duration of 20 years.

Airtel said that ‘the acquisition of this vast amount of spectrum’ will mean that it ‘does not need to spend any material sum on spectrum for many years to come’. In addition, this spectrum acquisition has enabled Airtel to drastically reduce the payout towards spectrum usage charge (SUC) and eliminate the adverse SUC arbitrage compared to new entrants.

Meanwhile, Singtel’s Indonesian associate, PT Telekomunikasi Selular (Telkomsel), will be selling another 6,000 telecommunication towers to PT Dayamitra Telekomunikasi (Mitratel).

As part of the agreement, Mitratel will also be deploying Telkomsel’s Internet of Thing (IoT) and Data Analytics services to provide real time management of the towers. Singtel owns a 35% stake in Telkomsel.

Singtel stock price: how do analysts view it?

The blue-chip counter is up approximately 10% year-to-date.

In terms of outlook, Singtel shares have a consensus rating of ‘outperform’ and an average price target of S$3.18, based on the latest SGX StockFacts data.

The price target equates to a 23.7% upside potential from its last traded price of S$2.57.

The latest call came from RHB’s equity research team, which reiterated a ‘buy’ rating and price target of S$3.55.

The analysts’ price target ‘bakes in a 12% premium for the company’s leading environmental, social and governance efforts’.

RHB also named Singtel as its preferred telco pick in Singapore.

DBS analyst Sachin Mittal also kept a ‘buy’ call on 19 July 2022, but raised his price target to S$3.24 from S$3.20.

He raised his full-year earnings forecasts for Singtel’s FY2023 and FY2024 by 5% and 4% respectively on the potential sale of software company, Amobee, and cybersecurity firm, Trustwave.

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