From The Edge Singapore - 13 Feb

DBS Group Research, Bank of America (BofA) Securities and UOB Kay Hian are keeping their bullish calls on Singapore Telecommunications (Singtel) after the telco&rsquo s 3QFY2026 results came in ahead of expectations, supported by resilient performance at Optus and stronger contributions from regional associates.

Singtel reported underlying net profit of $744 million for 3QFY2026 ended December 2025, up 14% year-over-year (y-o-y) and 11% quarter-over-quarter (q-o-q), broadly in line with consensus of $741 million. For the nine months ended December, underlying net profit rose 12% y-o-y to $2.1 billion.

DBS analyst Sachin Mittal is maintaining his &ldquo buy&rdquo call at a target price of $5.71. He argues that the results reinforce his view that Singtel&rsquo s core business are due for a re-rating from 5 times to 7 times Ev/Ebitda as execution improves and the holding company discount narrows.

Optus surprise offsets Singapore weakness

Analysts point to Optus as the standout performer this quarter. Despite the September 2025 triple-zero emergency services outage, the Australian unit delivered ebitda growth of 7.3% y-o-y in Australian dollar terms, with ebit surging 30%. Mobile service revenue rose 3.1% y-o-y, supported by postpaid ARPU stability at A$50 ($44.60) and continued subscriber additions. Wholesale and enterprise fixed revenue also improved on higher network-sharing income.

&ldquo Optus remained strong &mdash with 5% y-o-y ebitda growth, and mobile revenue/subscriber base/ARPU staying largely flat-slightly up q-o-q &mdash despite the triple zero outage in late September,&rdquo write BofA analysts Sukriti Bansal and Sachin Salgaonkar in their Feb 12 note.

They reiterate their &ldquo buy&rdquo call at $5.50 price objective, saying the quarter supports their view of improving return on invested capital, particularly at Optus, even as it monitors potential penalties from the ongoing Australian Senate hearings.

In contrast, the Singapore mobile remains under pressure. 3QFY2026 operating revenue declined 3.7% y-o-y, mainly due to an 11% drop in mobile revenue from weaker roaming and heightened eSIM competition. Subscriber numbers slipped slightly q-o-q, though blended ARPU held steady at $23.

DBS&rsquo Mittal believes Singapore ARPU could improve within six to 12 months, while BofA&rsquo s Bansal and Salgaonkar assume pricing repair post any M1-Simba merger approval could take eight to 10 months to filter through.

Viewing Singapore market repair as one of the key catalysts for further upside, UOB Kay Hian analyst Chong Lee Len maintains her &ldquo buy&rdquo call at a higher target price of $5.50, up from $5.20.

Associates, NCS and data centres add support

Regional associates remained a key earnings driver, with third-quarter pre-tax contributions up 16% y-o-y to $758 million, while nine-month contributions climbed 19% to $2.2 billion.

Bharti Airtel led growth, with India mobile ARPU rising to Rs259 from Rs245 a year earlier. Telkomsel showed signs of recovery, with third-quarter pre-tax contribution up 15% q-o-q to $165 million on tariff hikes. AIS posted 50% y-o-y growth in quarterly pre-tax contribution, while Globe rose 36% y-o-y on higher operating revenue and contributions from Mynt.

NCS recorded 9.4% y-o-y revenue growth in the quarter, with ebit up 32%. Chong notes a healthy $2.6 billion orderbook and sees margin expansion from cost optimisation as a structural positive.

Digital InfraCo&rsquo s nine-month ebit rose 12% y-o-y, supported by 22% ebit growth at Nxera. Chong has factored in Singtel&rsquo s proposed 25% acquisition of ST Telemedia Global Data Centres into her valuation, viewing data centres and NCS as potential value-unlocking themes.

Outlook unchanged

OpCo ebit for the quarter came in at $362 million, up 5% y-o-y. With nine-month OpCo ebit up 10%, Singtel reaffirms its FY2026 guidance for high-single to double-digit OpCo ebit growth.

BofA has lifted its FY2026&ndash FY2028 earnings forecasts by about 4% on average to reflect stronger momentum and margins, while DBS sees upside from valuation re-rating. UOBKH flags additional catalysts, including clearer value realisation of data centres and stronger-than-expected Optus cost savings.