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Is Singapore Telecommunications Limited Going To Be The First S$100 Billion Company In Singapore?
As most investors in Singapore may know, Singapore Telecommunications Limited (SGX: Z74) is the largest company by market capitalisation in the Straits Times Index (SGX:^STI) with its market value of close to S$63 billion.
Given its size, it might be interesting to ask – can SingTel be the first S$100 billion company listed here in Singapore?
Currently, SingTel’s the largest telecommunications operator in Singapore, and the second largest in Australia (through its wholly-listed subsidiary, Optus). In addition, the company also has investments in many of the top telcos around the world. Countries in which SingTel has interests in include India, Thailand, Indonesia, Philippines, and many African countries.
All told, SingTel, through its wholly-owned subsidiaries and minority investments in other telcos, reaches over 500 million customers globally.
SingTel’s market cap needs to grow by about 65% before it can reach the S$100 billion mark. Of course, its business needs to scale up by roughly the same percentage as well. There are a few possible ways for SingTel to do it.
The first way is through mergers and acquisitions. SingTel’s acquisition of Optus in 2001 really helped boost its international presence. If the company is able to acquire just one more huge telco, the S$100 billion mark might be nearer than we think. Although the acquisition of a foreign telco is an extremely politically sensitive subject, telcos around the world seem to be warming up toward international partnerships – for instance, Japan-based Softbank Corp had merged with Sprint Nextel Corporation in the USA just last year. Some of the possible targets for SingTel might be companies in which it already has interests in.
The second way is through growth in the digital space. With the growth of mobile internet, the possibilities in this new digital space are growing. SingTel has created a division led by Allen Lew called Digital Life which has been investing heavily in such opportunities. There’s lots of work to do in improving the financial performance of SingTel’s Digital Life division, but if the company can be successful in this venture, it might bring lots of value to shareholders.
Given SingTel’s size, it wouldn’t be a surprise if many investors have the impression that it is a boring and huge company that is only capable of offering a stable dividend for its shareholders. But given what I’ve discussed earlier, there are ways for SingTel to grow and perhaps one day breach the S$100 billion market cap mark in Singapore for the first time ever.