Will Singtel sell its Thai telecoms associates shares?

Singtel’s joint-venture companies in Thailand have caught the attention of a prospective buyer.

  • Singtel (SGX: Z74) share price slips to S$2.53 per share
  • Thailand’s Gulf Energy is looking to buy all shares of two Singtel associates
  • Following the offer, Singtel is ‘reviewing its strategic options’ for Intouch and AIS
  • As for the telco’s units in India and Philippines, JPMorgan is not positive on them
  • Buy and sell Singtel stocks with an IG account

Singtel shares: Is S$2.89 a realistic target?

Singapore Telecommunications (Singtel) shares were trading 0.4% lower at S$2.53 as of the midday break on Monday (26 April 2021).

The stock is down nearly 3% from a week ago, when electricity producer Gulf Energy Development announced its intention to acquire Singtel’s telecommunications units in Thailand.

Optimism prevailed among research teams this weekend, with Singtel shares attracting ‘buy’ ratings from 15 out of 19 analysts, and four ‘hold’ recommendations. The analysts’ 12-month target price stood at S$2.89, according to Bloomberg data.

JPMorgan, rating Singtel ‘neutral’ with a S$2.60 target, last week highlighted that there may be limited near-term catalysts for the stock, and new entrants and earnings pressure could be drags on a potential re-rating.

Within Singtel’s regional associates, JPMorgan analysts are positive on contributions from Indonesia’s Telkomsel and Thai telecommunications firm Advanced Info Service Public Co (AIS) in the near term.

However, Bharti Airtel in India faces a challenging operating environment despite recent improvement in operational performance, while Globe in the Philippines faces the risk of market share losses, in JPMorgan’s view.

Singtel reviews strategic options for Thai units

Last Monday (19 April 2021), Gulf Energy said it is seeking to buy up shares in Singtel’s two joint-venture firms in Thailand: AIS and its controlling shareholder Intouch Holdings Public Co.

Bangkok-listed Gulf Energy intends to invest in all ordinary shares of Intouch at an offer price of 65 Thai baht per share. If it manages to secure at least a half stake in Intouch, it will also make a tender offer for all AIS securities at 122.86 baht per share.

Singtel said it views its stakes in Intouch and AIS as strategic investments, and believes ‘in the long-term outlook of the businesses’.

The Singapore telco added that it ‘is reviewing its strategic options to ensure that Intouch and AIS shareholders get full benefit of the intrinsic value of the businesses’. Singtel owns a 21% effective interest in Intouch and around 23% of AIS.

Fitch Ratings told The Business Times that Singtel might be unlikely to relinquish its interest ‘unless they are being offered a very good price’, given that AIS is a major part of the group’s regional portfolio and one of its ‘better-performing’ associates.

Bloomberg Intelligence analysts wrote that the Singapore-listed group may try to retain its stakes in the Thai telecoms associates, ‘but may not be able to block Gulf Energy’s acquisition’.

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