New Street: SingTel (Buy, TP: S$3.7, +54%) Bharti capital raise. Implications and strategies for value unlock
Following the strong rally in Bharti shares, the SingTel ‘rump’ assets (Singapore/Optus) are once again trading at an all-time low of 3.6x EBITDA. We believe this reflects the quandary SingTel finds itself in where it has cut the dividend to reduce leverage but is now facing a capital call at Bharti which makes it much harder to de-lever. In this note we run through a detailed analysis of HQ funding and how leverage will be impacted.Singapore Telecommunications is engaged in the operation and provision of telecommunications systems and services, and investment holding. Co. provides a range of multimedia and Information and communications technology solutions, including voice, data and video services over fixed and wireless platforms. Within both Singapore and Australia, Co. provides mobile communications, data and Internet, national telephone, information technology and engineering, sale of equipment, international telephone and pay television. Co.'s key businesses include: Group Consumer, Group Digital L!fe, and Group Information and communications technology.
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