Singtel posts 9% rise in annual profit, announces $1.6 bln buyback

Singapore Telecommunications (Singtel) reported a 9% increase in underlying net profit to S$2.47 billion, driven by strong performances from Optus, NCS, and regional associates, while group net profit surged to S$4.02 billion due to a one-off gain from a partial divestment. The company announced a S$2 billion share buyback program and forecasts high single-digit EBIT growth for fiscal 2026, despite acknowledging potential indirect impacts from geopolitical risks and inflationary pressures. Singtel plans to invest S$2.5 billion in capital expenditure, including S$800 million for data centers and AI infrastructure, to capitalize on growing demand for digitalization and AI.

Analysis

Singapore Telecommunications (Singtel) reported a solid financial year ending March 31, with underlying net profit increasing by 9% to S$2.47 billion, a result attributed to robust contributions from its Australian unit Optus, IT services arm NCS, and regional associates such as Bharti Airtel and AIS. The group's net profit saw a more than fivefold surge to S$4.02 billion, significantly boosted by a S$1.55 billion one-off exceptional gain from the partial divestment of its Comcentre headquarters. In a move to enhance shareholder value, Singtel announced a S$2 billion share buyback programme to be executed over three years, alongside a final dividend of 10 Singapore cents per share, culminating in a total annual dividend of 17.0 cents. Management highlighted that these outcomes reflect strong execution of the Singtel28 strategy and significant operational restructuring aimed at fostering sustainable growth. Strategically, Singtel is positioning itself for future opportunities by planning S$2.5 billion in capital expenditure, including a substantial S$800 million investment in data centres and AI infrastructure, anticipating growing demand in digitalisation and AI. The company projects high single-digit earnings before interest and taxes (EBIT) growth for fiscal 2026, though it acknowledges potential headwinds from prevailing geopolitical risks, inflationary pressures, and the indirect impact of trade conflicts on consumer and business sentiment.

Key Decisions for Investors

• Investors should view Singtel's 9% underlying net profit growth and the S$2 billion share buyback program as positive indicators of operational strength and commitment to shareholder returns.
• The planned S$2.5 billion capital expenditure, with a significant S$800 million allocation to data centres and AI infrastructure, signals a strategic focus on high-growth areas, which could drive future earnings, though execution and competitive dynamics in these sectors warrant monitoring.
• While Singtel forecasts high single-digit EBIT growth for fiscal 2026, it is prudent to consider the stated geopolitical risks, inflationary pressures, and potential indirect impacts from trade conflicts, which could affect the company's performance and outlook.