Singtel

Singtel: CLSA has a report solely on Singtel's Digital M&A, and are confused as to Singtel's intentions regarding its digital acquisitions. Highlighting that the $500m (20% of FCF) spent in 12 months is not minor, given that there is no indication as to how or when they will turn profitable. The Group's historical focus on associate stakes in regional telcos has been deployed into digital acquisitions in the past 12 months, with the investments into unprofitable companies which are difficult to monetize, and has an average age of 5.5 years. CLSA is concerned that Singtel is trying to build an eco-system, and don't think it is feasible for a telco to stick another layer of restriction – under the guise of additional or proprietary content – on top of the existing operating system platforms. It would be like volunteering to go back to AOL Online or CompuServe’s interface having tasted the internet proper. CLSA has a SELL on Singtel, with TP of $3.55.