Singapore Telecommunications (Z74) Status update summary

Strategic reset and transformation

• Undertook a strategic reset in 2021 due to management changes and industry headwinds, focusing on digitalization and capitalizing on new trends.

• Carved out and scaled up growth engines in data centers (Nxera) and IT services (NCS), bringing in KKR as a strategic investor.

• Implemented capital recycling, monetizing assets and selling loss-making businesses, especially outside Southeast Asia, to focus on core markets and improve profitability.

• Simplified business structure in Singapore and Australia, merging enterprise and consumer units for greater efficiency.

• Despite asset value realization, stock price remains low due to a holding company discount, which management aims to address through operational performance and capital returns.

Growth strategy and market outlook

• Positioned for growth in emerging markets like India, Indonesia, and Thailand, where industry consolidation is improving profitability and sustainability.

• Sees significant future growth in fixed broadband and digital infrastructure, with low penetration in key markets compared to Singapore.

• Data centers and IT services are key growth drivers, with new investments and partnerships, including GPU-as-a-Service with NVIDIA.

• 5G investments are focused on industrial and enterprise use cases, with consumer monetization progressing more slowly.

• Emphasizes strong local partnerships and ESG commitments, including green data centers and sustainable operations.

Capital management and dividend policy

• Introduced a programmatic value realization dividend (VRD) of SGD 0.03–0.06 per share annually, funded by asset recycling and excess capital.

• Maintains a core dividend payout policy of 70–90% of underlying profits, aiming for sustainable dividend growth in line with earnings.

• Raised SGD 8 billion through asset recycling, used for growth investments and debt reduction, with SGD 1.4 billion excess capital remaining.

• Plans to recycle an additional SGD 6 billion in assets, balancing reinvestment and shareholder returns.

• Private capital partners like KKR help fund capital-intensive growth, protecting core dividends and enabling long-term expansion.