3 Things That Investors Should Know About Singapore Telecommunications Limited

Singapore Telecommunications Limited (SGX: Z74) is the largest telecommunications outfit in Singapore.

But, its business extends beyond the shores of our Garden City. The company actually has a presence in over 25 countries, including Australia, Thailand, Indonesia, and India. All told, it has over 600 million mobile customers around the world.

Here are three things investors may want to know about Singtel:

1. Consistently profitable over the past decade

Singtel has been consistently profitable over its last 10 fiscal years, with its profit coming in within a tight band of between S$4.2 billion and S$3.4 billion.

Some factors that may help explain that consistency would be Singtel’s business model (telcos tend to enjoy stable recurring revenue) and geographical diversity (though it is the biggest player in Singapore, Singtel generates three-quarters of its EBITDA from overseas).

2. History of paying steady dividends

Along with churning out consistent profits over the past decade, Singtel has also been dishing out annual dividends to its investors without fail over the same period.

From fiscal 2006 (fiscal year ended 31 March 2006) to fiscal 2016, Singtel’s ordinary dividend has also increased from S$0.10 per share to S$0.175 per share.

Singtel currently has a policy of paying 65% to 70% of its profit each year as a dividend. At its current price of S$3.95, the telco has a yield of 4.4% thanks to its fiscal 2016 dividend.

3. Valuations that are at the higher end of history

Singtel currently has a price-to-earnings (P/E) ratio of 16.3 at the moment. As the following chart shows, the telco’s current valuation is nowhere near the lowest it has been over the past five years.

Singtel PE ratio since 8 June 2011
Source: S&P Global Market Intelligence

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.