Singtel

Singtel: Indonesia’s PT Telkom confirmed it will enter into talks with intention of buying-back Singtel’s 35% stake in Telkomsel. While no details have been confirmed, sources note that PT Telkom appears confident that sale will go through. Singtel’s stake in Telkomsel is worth $8.6b, +18% CAGR since initial purchase, and has received $2.9b in cum div from Telkomsel, (48% of all associate div received by Singtel) and contributes to 16% of Singtel's operating profit……

Deutsche note that sale would add uncertainty to grp’s future and strategy and raises significant questions over relationship with other associates and its sustainability. House note that whether Singtel would keep or return any potential proceeds would be dependent on long-term strategy / intentions. Deutsche maintains Hold with $3.36 TP, given the stub valuation and HSBC maintains Hold with $3.48 TP.