Singtel Sells 70% of Australian Tower Business, Announces Plans to Invest in Asian Data Centres

Singtel announced the sale of 70% of its wholly owned Australian tower assets business, Australia Tower Network, and the planned investment in growing a regional data centre business. We make no changes to our SGD 2.42 fair value estimate and retain our narrow moat rating but would recommend investors wait for a better price to buy. Our fair value estimate implies a price/earnings ratio of 18 times, which is slightly ahead of its average over the past 10 years. On our valuation, the associate businesses are worth around 70% of the total value of Singtel with the remainder from Singtel’s consolidated Singapore and Australian businesses. To a certain extent, the stock remains a dividend play. We forecast the dividend per share to lift to SGD 9.4 cents in fiscal 2022 and SGD 12 cents by fiscal 2026.