What’s the outlook for Singtel as it appoints Ericsson as 5G provider?

Singapore Telecommunications (Singtel) has been awarded the 3.5GHz and the millimetre wave spectrum as part of one of two 5G licences issued by the Infocomm Media Development Authority. The other spectrum was awarded to a joint venture between StarHub and M1.

The group announced in a press release on Wednesday 24 June 2020 that it has selected Swedish broadband provider Ericsson to commence a period of negotiation to provide the 5G SA Core, RAN and mmWave network, with a view to finalising the contractual terms as soon as practicable.

Following that, Singtel shares opened flat at S$2.50 a share on Thursday 25 June.

Singtel CEO: 5G will ‘serve as backbone of digital economy’

Singtel Group CEO Ms Chua Sock Koong views the 5G network ‘as a significant investment in Singapore’s digital future’ and one that ‘will serve as the backbone of Singapore’s digital economy’.

‘This licence is also very timely in light of Covid-19 and the ensuing reliance on robust infrastructure and connectivity. Our existing network capabilities have allowed us to pivot quickly to the needs of the public and businesses at this critical time and 5G will help extend and accelerate the digital adoption we’ve witnessed as we navigate our way out of Covid-19 towards recovery,’ she added.

Looking ahead, Chua says that the company intends to ‘move beyond access and connectivity to create new enterprise use cases and innovative platforms, applications and services to reposition’ the business for growth.

The group has been test-bedding new consumer and enterprise 5G solutions through various trials with key technology vendors and public service agencies.

These trials include working with the PSA on developing port-related 5G use cases such as drones and crane automation at the Pasir Panjang Terminal, exploring how 5G can enable Industry 4.0 manufacturing technologies at the Agency for Science, Technology and Research’s Advanced Remanufacturing and Technology Centre, and testing network readiness for 5G cloud gaming with IMDA and Razer.

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Singtel Optus to issue A$850 million worth of notes

The group on Thursday 25 June 2020 also announced that its wholly-owned Australian subsidiary Singtel Optus has priced A$350 million (S$335 million) of five-year fixed-rate notes and A$500 million (S$477 million) of 10-year fixed-rate notes.

Both notes, guaranteed by Optus and unnamed subsidiaries, will be issued on 1 July 2020 as part of Singtel Optus’ wholly-owned subsidiary Optus Finance’s Australian Dollar Debt Issuance Programme.

The five-year notes will carry a coupon of 1.6% per annum and will mature on 01 July 2025. The 10-year notes will carry a coupon of 2.5% per annum and will mature on 01 July 2030.

This issue is part of Optus’ long-term financing strategy and extends the debt maturity profile of Optus. Optus will utilise the funds for general corporate purposes.

Australia and New Zealand Banking Group Limited, Commonwealth Bank of Australia and Westpac Banking Corporation acted as Joint Lead Managers and Bookrunners.

Singtel currently has an average share price target of S$3.19 from five Singapore bank analysts, representing an upside of 28% from the most recent bid price.

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