Singapore Telecommunications (Singtel), Southeast Asia's largest telecom operator, raised its full-year outlook after reporting a 10% rise in first-half underlying profit. For the six months ended September 30, underlying profit came in at S$1.49 billion, up from S$1.35 billion a year earlier, according to Reuters.
The company now expects core earnings before interest and taxes (EBIT) growth for fiscal 2027 in the mid-to-high single digits, an upgrade from its previous guidance. The improved forecast reflects a stronger-than-expected first half and continued momentum across its key businesses.
What drove the profit jump?
Singtel's results were bolstered by its stakes in other regional telecom operators. Post-tax contributions from associates—including Bharti Airtel in India, Advanced Info Service (AIS) in Thailand, and Telkomsel in Indonesia—rose 9% to S$993 million. These associate contributions are a significant part of Singtel's earnings, as the company holds minority stakes in several of Asia's largest telecom players.
Meanwhile, Optus, Australia's second-largest telecom operator and a wholly owned subsidiary since 2001, continued to improve. The Australian unit has been a focus for Singtel in recent years, as it works to recover from network outages and customer service issues. The improvement at Optus suggests that its turnaround efforts are gaining traction.
Why this matters for investors
For everyday investors, Singtel's upgraded forecast is a positive signal about the health of the company and the broader telecom sector in Asia. Telecom operators are often seen as defensive investments because they provide essential services that generate steady cash flows. Singtel's diversified portfolio—spanning Singapore, Australia, and stakes in fast-growing markets like India and Indonesia—offers exposure to both mature and emerging markets.
The company's reliance on associates means its earnings are partly tied to the performance of other listed companies, which can add volatility. However, the consistent growth in associate contributions suggests that these regional bets are paying off.
Investors will likely watch whether Singtel can sustain this momentum through the rest of the fiscal year. The upgraded guidance is a sign that management is confident in the company's trajectory, but telecom markets remain competitive, and regulatory pressures can weigh on pricing power.
Broader market context
Singtel's upbeat outlook comes at a time when telecom operators globally are investing heavily in 5G networks and digital services. These investments are capital-intensive, but they also open up new revenue streams in areas like enterprise services and data centers. Singtel has been expanding its digital and data center capabilities, positioning itself to benefit from the growing demand for connectivity and cloud services.
The company's performance also reflects broader trends in the Asian telecom market, where rising smartphone penetration and data usage are driving growth. In India, Bharti Airtel has been gaining market share, while in Indonesia, Telkomsel remains a dominant player. These markets offer long-term growth potential, even as competition intensifies.
For investors, Singtel's upgraded forecast is a reminder that telecom stocks can offer both income and growth. The company has a history of paying dividends, which can be attractive for income-focused investors. However, as with any investment, it's important to consider the risks, including currency fluctuations, regulatory changes, and the pace of technological disruption.
What to watch next
Looking ahead, investors will be keen to see how Singtel's full-year results shape up, particularly whether the company can deliver on its upgraded EBIT guidance. The performance of Optus will be a key factor, as will the continued contributions from associates. Any major developments in the regional telecom landscape—such as mergers, spectrum auctions, or regulatory shifts—could also affect Singtel's outlook.
Singtel's results also come amid a broader earnings season where companies across sectors are updating their forecasts. For instance, Cerebras raised its 2026 revenue forecast as its OpenAI deal ramps up, and Cisco lifted its AI revenue forecast on strong networking demand. These updates suggest that many companies are seeing robust demand, even as some stock prices fall while earnings forecasts hold, squeezing valuations.
For Singtel, the key will be execution. The company has a clear strategy to grow its core telecom business while expanding into digital services. If it can deliver on its upgraded guidance, investors may see further upside in the stock. But as always, past performance is not a guarantee of future results, and it's wise to consider your own financial situation before making any investment decisions.
