Singapore Telecommunications Limited (SGX: Z74) or Singtel has witnessed a significant jump in its share price year-to-date for 2025, outpacing the broader Straits Times Index (SGX: ^STI).
With an interest rate cut expected later this month, investors are asking one important question: is there any upside left for Singtel’s share price?
Singtel’s latest business update provides some clues.
Singtel’s 2025 Rally: What’s Driving the Momentum
In its business update for the first quarter of the financial year ending 31 March 2026 (1Q FY26), Singtel delivered a solid set of results.
The telco’s underlying net profit rose by 14% year on year (YoY), backed by stronger earnings before interest and taxes (EBIT) from Optus and NCS as well as higher profit contributions from its regional associates, Airtel and AIS.
In sum, net profit jumped to almost S$2.9 billion, mainly due to S$2.2 billion in exceptional gains from the partial sale of its Airtel stake and Intouch-Gulf Energy merger.
At the same time, market participants appear to be buying into the execution of its Singtel28 strategy.
The Bright Spots: Where Growth Is Coming From
The following business units are fueling the growth of Singtel.
For Optus, revenue was up 4% YoY to around A$2 billion, EBIT up 36% YoY to A$133 million mainly due to the higher mobile average revenue per user (ARPU) and disciplined cost control.
For NCS, revenue went up by 4% YoY to S$733 million, EBIT up 22% YoY on stronger margins and managed to secure a healthy project pipeline, with secured bookings of S$0.7 billion in 1Q FY26.
Within the regional associates, Airtel India’s profit after tax (PAT) more than doubled, boosted by India’s mobile price increase effective from Q2 FY25; AIS also delivered strong growth in mobile and fixed broadband driven by expanded customer base and ARPU uplift.
The expansion of Nxera data centre remained on track to more than 200MW capacity by December 2026 and will explore investments into new tier-1 regional markets.
The Headwinds: What Investors Need to Watch
Despite the growth, investors should keep a lookout for some of the headwinds that Singtel might be facing in the near term.
For Singtel’s core business in Singapore, domestic revenue remained flat with mobile service revenue dropping 11% YoY as roaming and voice services weakened.
Meanwhile, in Australia, Optus remained a drag for Singtel given the ongoing efforts to repair its reputation following its 2022 data-breach incident.
At the same time, competition within Australia’s telecom industry remained intense.
Elsewhere, analysts believe shares could be overvalued.
For instance, Morningstar values Singtel at S$3.67 per share.
At S$4.39 per share last Friday (5 September 2025), the local telco’s valuation appears to be slightly stretched as it trades at close to 1.2 times of its fair value.
Dividend and Capital Recycling
On the dividend front, Singtel has committed to pay out between 70% and 90% of its underlying net profit after tax (NPAT), a fairly high dividend payout ratio.
The telco plans to further boost its payout through the “value realisation dividend” in the medium term.
Apart from the high dividend payout ratio, Singtel continues to unlock value via asset recycling.
Singtel has lifted the asset recycling target to S$9 billion, with S$2 billion being allocated for share buybacks, further enhancing shareholders value.
The ongoing Singtel28 plan places significant emphasis in terms of returning excess capital to shareholders while reinvesting in high growth initiatives such as in data centres and IT services.
Get Smart: Still a Buy?
For the case of Singtel, its strong associates’ growth, Optus’s potential recovery, the execution of ongoing NCS project pipeline, active capital recycling, and a sustainable dividend payout make up the bullish case for investing.
On the other side of the coin, the stock’s recent run up could mean its valuation is overstretched while facing headwinds for its Singapore’s mobile business.
Lingering Optus risks could be a cause for caution as well.
The bottom line is that Singtel remains a fairly resilient and stable dividend stock for investors to rely on, given the potential growth in its data centres business segment and associates.
However, the run up in its share price provides a lower margin of safety for investors.
This new 10-minute read could change how you invest this year. Inside:
5 SG dividend-paying blue chips that have quietly powered through past downturns, and could reward you handsomely in the next.
Grab the free report now. It might be the most profitable thing you read today.
Disclosure: Zheng Long does not own shares in Singtel.
