Singapore Telecommunications Limited (SGX: Z74), or Singtel, has long given the impression of being a stable, albeit boring, blue-chip company that provides steady dividend income.
At least, that’s how I’ve viewed the company for the longest time.
However, the group’s recent transformative initiatives may finally be bearing fruit; its latest half-year results for the period ended 30 September 2025 (1HFY2026) provide supportive evidence.
In this article, let’s take a deeper look at the group’s latest results — and see if Singtel’s improving fundamentals could finally herald a shift in market perception.
Profit Growth Despite Currency Headwinds
Headline turnover declined 1% year on year (YoY) to S$6.91 billion.
However, on a constant currency (CC) basis (stripping off foreign exchange movements), revenue actually rose 2% YoY.
Focusing on the CC basis, Singtel actually performed well operationally, contrary to what the headline numbers suggest.
Operating earnings before interest and taxes (EBIT) rose 13% YoY to S$0.83 billion, highlighting cost discipline and steady execution in the telecom’s operations.
The group’s operating margin has continued to climb steadily since reaching a bottom in FY2021 at 7.4%, and currently stands at 10.4% on a trailing basis.
Underlying net profit did even better in 1HFY2026, rising 14% YoY to S$1.35 billion due to strong profit contributions from regional associates, which came in at S$0.92 billion (up 12% YoY).
In all, Singtel’s operating performances highlight steady execution, rather than relying on favourable currency movements.
NCS Emerges as a Key Growth Engine
The non-telecom technology arm NCS was a standout performer in 1HFY2026.
It grew the fastest on the back of solid business demand and also produced margin expansion through cost optimisation.
The segment earned revenue of S$1.5 billion, up 6% YoY.
However, EBIT rose strongly, up 41% YoY to S$184 million.
The EBITDA (earnings before interest, tax, depreciation, and amortisation) margin – a gauge of the segment’s profitability – improved to 14.5% from 11.5% a year earlier.
The performance of NCS reinforces Singtel’s strategic shift toward higher-value digital and technology services, giving the group a nice avenue for diversified growth and cash flows apart from its traditional telecoms businesses.
Optus and Core Telco Operations Stabilise
Focusing on Singtel’s core telecom business, Optus saw strong 27% YoY growth in EBIT to AUD$283 million, supported by strong growth in mobile.
Singtel’s local Singapore business remained stable, with EBIT of S$440 million, contributing resilient earnings for the group.
Looking forward, investors should continue monitoring the key operating metrics for this business segment, such as pricing power via average revenue per customer per month, as well as subscriber trends.
The key takeaway here is that Singtel’s core telecom business continues to be a solid contributor to earnings.
Associates Provide a Powerful Earnings Boost
As mentioned earlier, Singtel’s regional associates’ contribution contributed to its underlying net profit growth, led by Airtel’s strong performance in India and Africa.
Profit after tax for this segment rose to S$915 million, up 12% YoY (16% on a CC basis), led by strong mobile growth in both subscribers and pricing from Airtel India and Africa.
These two associates contributed S$464 million and S$74 million, up 68% and 96% respectively.
The main takeaway here is that contributions from Singtel’s associates could lead to large overall impacts on the group’s underlying net profit growth.
Furthermore, the stakes in the overseas mobile providers continue to be a long-term strength for the group.
Dividend Growth Signals Confidence
Singtel’s strong 1HFY2026 results support its ability to raise its interim dividend to S$0.082 per share (up 17% YoY).
Do note, however, that this interim dividend consists of S$0.064 per share of core dividend and S$0.018 per share of value realisation dividend (dividends that are paid out as Singtel continues the capital-recycling of its assets).
Focusing on the core dividend of S$0.064 per share, it rose 14.3% YoY in 1HFY2026, and this is backed by Singtel’s free cash flow rising 11% to S$1.45 billion.
The solid core dividend growth best exemplifies Singtel’s improving earnings story.
Balance Sheet Strength Continues to Improve
Net debt declined meaningfully, from S$8.9 billion as at 31 March 2025 to S$8.0 billion as at 30 September 2025.
This was due to strong free cash flow generation and asset monetisation.
For reference, Singtel reduced its Airtel India stake by 1.2% in May 2025, generating some S$1.93 billion in net proceeds.
Aggregate leverage improved, with net debt gearing ratio declining from 26.7% to 24.3%.
This reduction of leverage provides greater flexibility for Singtel in terms of further business investments and/or increased shareholder returns.
It also gives credibility to Singtel’s turnaround narrative.
What Could Unlock a Share Price Breakout
So, what are the things that could lead to a rally in the share price?
The most compelling case would be sustained profit growth across both Singtel’s NCS and Optus segments and continued profit contributions from regional associates.
Combine this with disciplined capital management and steady dividend growth, and it should lead to share price appreciation.
Improved investor sentiment in Singtel’s operating performance could also contribute to the capital appreciation of the shares.
Investors have to balance these contributing factors with possible execution risks: growing its NCS business well; regional contributions from associates staying resilient; and its core telecom business holding up well.
Macroeconomic uncertainties, such as high inflation and intensified competition, could derail Singtel’s margins.
Management is guiding for softer growth in operating profit for the whole of FY2026, owing to operational disruptions suffered by Optus Australia.
What This Means for Investors
Singtel’s latest results further lend credence to the group’s turnaround narrative.
Moving forward, Singtel has to prove that these improvements are sustainable rather than cyclical.
Only through consistent execution could Singtel merit a possible upward rerating of its shares by the market.
Get Smart: Turnarounds Take Time to Be Recognised
Singtel is finally walking the talk – profits are up, dividend is growing, and the balance sheet is getting healthier.
If the group keeps executing, we might be due for a breakout to new all-time highs.
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Disclosure: Wilson.H does not own shares in any of the companies mentioned.
