<News Analysis> Another capital re-cycling
- Singtel to raise its stake in Intouch Holdings, lifting its economic interest in Advanced Info Service (AIS) from 31.89% to 33.42%.
- Singtel has freed up S$2.1bn of capital in the last one-year and targets another S$3bn of capital divestments in the medium-term with focus on investing in ICT and data-centre business.
- Maintain BUY call with unchanged TP of S$3.20
Singtel will be increasing its stake in Intouch Holdings, from 21.21% to 24.99%, Singtel will be acquiring ~121 million shares from Temasek’s Anderton Investments for S$330 million. As a result of the acquisition, Singtel’s economic interest in AIS will also be lifted from 31.89% to 33.42%.
Singtel has freed up S$2.1bn of capital in the last one-year and targets another S$3bn of capital divestments in the medium-term. Sale of stake in Optus tower, Airtel Africa and partial sale of Trustwave business, have freed up S$2.1bn of capital for Singtel. Singtel further targets another S$3bn of capital divestments in the medium-term and has identified ICT business and data-centre business as growth drivers. Out of S$2.1b proceeds, Singtel has invested ~S$1.1bn in Australia acquisitions – ICT, Axicom and Amaysim, S$560m in Airtel rights issue, S$48m in Bank Fama in Indonesia and another S$330m in Thailand with this one almost using all the divestment proceeds to drive growth.
Focus on growing data-centre business in Thailand. Intouch has been delivering good returns supported by consistently strong execution from AIS in Thailand. Singtel (25% stake in Intouch) and Gulf (44% stake in Intouch) can work closely to drive a digital ecosystem for consumers and enterprises, and build a strong data-centre business in Thailand. Thailand’s digital economy is projected to almost double in four years from US$30 billion in 2021 to US$56 billion in 2025 as per Google, Temasek, Bain e-Conomy SEA report 2021. The transaction is expected to be completed by end June 2022.