Fitch Ratings forecast Singtel’s capex next fiscal year to spike due to hefty spectrum payments, but rising EBITDA supported by an ongoing asset recycling programme will improve its overall credit profile. 

Capex in fiscal 2025 (ending 31 March that year) is expected to rise to SGD4.4 billion ($3.3 billion), including an AUD1.5 billion ($987.2 million) payment for 900MHz spectrum in Australia and SGD376 million for 700MHz airwaves in Singapore. Group capex for fiscal 2024 was forecast to rise 17.4 per cent to SGD2.7 billion.

The outlay, however, should slip back to between SGD2.3 billion and SGD2.6 billion annually during the following two fiscal years, the rating agency stated.

Fitch expects funds raised from asset sales to be sufficient to cover the group’s higher capex earmarked for spectrum and digital infrastructure. 

It predicts Singtel’s EBITDA will increase 8 per cent in fiscal 2025, after an estimated 1 per cent decline in the current fiscal year and a 2 per cent fall in fiscal 2023. Its profit margin also is forecast to rise following the divestment of loss-making Trustwave and rising contribution from its ICT unit NCS.

Singtel’s Australian unit Optus is expected to generate about 34 per cent of EBITDA in fiscal 2024, while its overseas operations will contribute more than SGD3 billion a year, or 60 per cent of the total.