Singtel considers contribution by its separately listed associate SingPost as "not significant" to its overall earnings. The telco, as part of its ongoing "strategic reset" is constantly reviewing which assets to grow, or to divest, in its bid to deliver better shareholder value.
"Active capital management is a key part of our strategic reset," says Singtel, responding to a question from a shareholder ahead of its AGM on July 28, on what is the impact on the telco's financials from the decline in SingPost's market value, and if there are plans to monetise the stake.
"We constantly review our portfolio of assets and are open to monetising assets that do not fit in with our strategy or if we feel will lead to greater shareholder value," the telco adds.
Under the current management team, the telco is constantly looking for assets to monetise at the right price and is rechannelling some of the proceeds into capex in new growth areas such data centres and 5G networks.
With a stake of 21.96%, Singtel is SingPost's single largest shareholder. SingPost was spun off by Singtel for its own listing two decades ago.
For the year ended March 31, SingPost reported earnings of $24.7 million; Singtel, meanwhile reported earnings of $2.23 billion.
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Year to date, SingPost shares have dropped 1.92% to close at 51 cents on July 21. Over the past five years, the drop is of a greater magnitude of 62.22%, as the postal operator's original core business mail delivery suffers from a structural decline that accelerated with the pandemic.
SingPost, on its part, has recently launched its own strategic review to decide how to make the postal business a sustainable one, as it doubles down on growing its overall logistics business, which now accounts for 90% of its operating earnings.
In an interview with The Edge Singapore on July 17, SingPost group CEO Vincent Phang when asked, declined to comment if Singtel is looking monetise its stake in his company.
Another shareholder asked how can the creation of the so-called "digital infraco" by Singtel unlock value. The creation of this new entity was part of an overall organisational restructuring announced by Singtel on April 27.
In response Singtel says its portfolio of digital infrastructure assets across the region, which used to be the "passive backbone" of its business, has turned into a growth area.
"Having built up these assets through the years, establishing them as a standalone business will allow us to capture new growth as the importance and appeal of these assets continue to increase," Singtel says.
In addition, by grouping these assets as part of the Digital InfraCo, they can be valued at "proper market value", instead of suffering from a discount as part of sprawling telco, most of which trade at lower valuations.
"Should an opportunity arise, the group has the option to illuminate the value of the assets in Digital InfraCo," says Singtel, without specifically mentioning how it will be done, but presumably includes moves such as selling a stake to third parties.
Singtel shares closed July 21 at $2.60, up 1.17% for the day and up 1.96% year to date.
