ST Explains: What to consider before selling your Singtel special discounted shares

SINGAPORE – With Singtel announcing on April 7 that it would be transferring its special discounted shares (SDS) to holders’ direct ownership, it opens the doors for an estimated 615,000 Singaporeans to manage their investments in the telco flexibly.

The move ends the Central Provident Fund’s role as the trustee of their SDS, subject to Parliament passing the CPF (Amendment) Bill in May.

SDS holders will be able to sell their shares in full for cash from April 8.

But they also have the flexibility to sell them at a later time, based on Singtel’s financial performance in the future.

Of the 615,000 SDS holders, about 75 per cent do not own other Singtel ordinary shares. This would mean a sizeable pool of shareholders aged 50 and above who may not be familiar with trading the company’s stock.

What the move means for SDS holders

SDS holders now have the flexibility to either sell their shares for cash or hold on to them.

The median shareholder who decides to cash out will enjoy a windfall of around $6,800, based on the share price of $5 as at April 1.

Those who hold on to their shares will receive them in their Central Depository (CDP) accounts from Nov 21, according them full and direct ownership of the shares.

As a direct shareholder, they would be able to participate in Singtel’s annual general meetings, and are entitled to receive dividends from the company.

In December 2025, Singtel paid out an interim dividend of 8.2 cents per share for the half year ended Sept 30, up 17 per cent from the 7-cent payout in the previous year.

A median SDS holder owns 1,360 shares, which would have earned $111.52 in dividend.

Ms Chu Peng of OCBC Group Research said: “Singtel’s attractive dividend yield remains a compelling reason for investors to retain their holdings, particularly given that interest rates on cash deposits remain relatively low.”

What should SDS holders consider before making a decision?

As with any company’s shares, SDS holders should also consider Singtel’s core fundamentals, like its financial and operational health, as well as its business strategies. These would give an indication of the telco’s growth potential in the near and middle term.

Singtel’s revenue has been largely flat over the last few years, but it closed the 2025 financial year with a net profit of $4 billion, after seeing profits fall 64 per cent to just $795 million the previous year.

So far, its share price has more than doubled in two years, from around $2.40 in April 2024 to $4.97 on April 7. Its market cap has also ballooned from $41.8 billion in 2024 to $83 billion in 2026.

With these reference points, SDS holders can have a better idea of whether they should cash out their shares now, or sell later in the future when Singtel’s stock could potentially rise further, and enjoy more dividends in the meantime.

Maybank analyst Hussaini Saifee gave a “buy” rating for Singtel, noting that the telco would likely deliver double-digit earnings growth from financial years 2025 to 2028.

In his note in February, Morningstar analyst Dan Baker forecast an 11 per cent compound annual growth rate in Singtel’s core business operating profit for the next five years. However, he added that the company’s share price is also “mildly overvalued”, exceeding the house fair-value estimate of $4.45.

What is Singtel’s business today?

While Singtel remains a household name as a telecom operator in Singapore, the company has transformed since its transition from a statutory board to a publicly listed company in 1993.

It is still the Republic’s biggest telco, but 80 per cent of its business comes from its overseas footprint.

In addition to its fully owned Australian telco subsidiary Optus, Singtel has substantial stakes in telcos in Thailand, Indonesia, India and the Philippines.

In particular, its Indian and Australian businesses are expected to be the main driver for its growth in the financial years 2027 and 2028, which could be as high as 13 per cent to 14 per cent, said Mr Sachin Mittal, DBS Bank Group Research analyst.

Mr Saifee said that Singtel’s expansion overseas was a good diversification strategy for the company that has “paid off handsomely”, as it helped to offset pressures in the domestic telco market after the entry of low-cost carrier Simba.

But this earnings diversification has also increased Singtel’s exposure to currency volatility and business risks across different markets, said Ms Chu.

She added that the telco is increasingly viewed as a defensive play, relatively resilient amid geopolitical tensions, as demand for telecommunications services remains strong even during periods of economic downturn.

Singtel is also undergoing major transformation, pivoting away from its traditional telecommunications business such as phone lines and broadband internet.

Instead, it has begun to invest heavily in digital technologies such as data centres, cloud systems and artificial intelligence, as part of its five-year growth strategy called Singtel28. It was launched in 2024 to focus the telco’s business primarily on connectivity, digital services and digital infrastructure.

This is aimed at improving business performance and capital management to deliver stronger returns, which also led to a revised dividend policy.

The telco introduced a new “value realisation dividend” of three to six cents per share per annum, in addition to the core dividend, which had its payout range increased to between 70 per cent and 90 per cent of underlying net profit.

The Singtel28 strategy is expected to support growth and dividends, as demand increases for data centres and AI-driven services, said Ms Chu.

What if SDS holders are unable to make a financial decision?

For those who may already have lost their mental capacity and are unable to make financial decisions on their Singtel shares, their donee appointed under their Lasting Power of Attorney, or court-appointed deputy, can complete the transactions for them.

This can be done at Singpost branches with their notification letter from the CPF Board and Singtel, along with other relevant documents.