Singapore Telecommunications Stock

Good morning, everyone. Well, once again, thank you for joining us today on Singtel Investor Day. I always look forward to today because today, whenever I see investors, I have to repeat myself usually when I go on a conference 8 times a day -- 6 times a day. But today, I'm only going to do it once. And I'm going to cover so many of you all at once. Let me start today by giving you a quick rundown of where we are as we embark on our Singtel28 plan 3 years ago when we announced it in May '24.

So this is just a snapshot. We are into our third year of our Singtel28 plans. We promised that we will lift our operating performance 2.5 years ago. And if you look at the last 2 years, we have delivered that with operating EBIT -- OpCo EBIT moving at double digit for 2 years.

Our regional associates, 4 of them are here today. They have also performed credibly and giving us resulting in the double-digit underlying profit growth for the last 2 years. We also talked about capital recycle and how we're going to redeploy this capital. Of course, some going into growth engines, investing into CapEx, but others, the remaining will be returned to shareholders. We gave ourselves a $9 billion midterm target. So far, we have achieved 75% of that. We recycled $6.8 billion so far. And we earmarked if you recall $5 billion of VRD, Value Realization Dividend. And so far, we have paid $2.2 billion of that. We also announced a $2 billion of share buyback. And so far, we have completed about 44% of that. And we have another 56% to go for the next -- for 1 more year into FY '28.

So this is, I would say, the 2-year sort of report card. And we have also just delivered our last year dividend, full year dividend of $0.185, which is, I would say, the highest ever in terms of ordinary dividend that we have given out. And if you recall back then, I also set a midterm target of delivering double-digit ROIC. We have achieved that at the close of last financial year. So we delivered our sort of tracking to the plan of ST28. And fast forward, then you move into, of course, something that we all track and my Board and my shareholder looks at it and my shareholder is here today as well. They say, how are you performing in TSR?

And I'm pleased to say that since the Singtel28 plan was announced in May '24, we have actually performed credibly against the STI, against the MSCI AC Asia ex-Japan Telecom Service Index. So I think they're tracking to the plan. So there will always be ups and downs. And in fact, there were some questions at our AGM, why did the share price came down from its peak. But what, in essence, is really not about -- we can't predict how the market reacts. We have to just do what we can, which is to deliver what we have promised, right? And that's the consistency that we want to give and assure everybody, we will stick to the plan. The ST28 plan is intact. Let me just go back to give you a bit of a geographical footprint of Singtel.

I always tell people, Singtel is really as a name is a misnomer because it's neither just in Singapore nor just in telecoms. And yet we call ourselves Singtel. So everyone, when we think about Singtel, they only think about Tian Chong's business, Singtel Singapore business. And that's most retailers -- retail investors think about. But of course, with the informed group here, you know Singtel is much bigger than just a telecom company in Singapore. But I thought giving you this visual representation will then drive on the point, especially when we move into new growth engines. So first, this is something that you're all well known. Our digital connectivity business has 6 operating companies in Singapore, Australia, India, Thailand, Indonesia and Philippines. This is all well known, so I won't [indiscernible] this point.

And this is really our core business. And we've been executing to the plan, transforming this and has lifted, I would say, the Singtel Group for the last 20, 30 years really in this digital services and digital connectivity. But moving on to a new growth business, which is digital infrastructure. This is where Nxera, the data center business that we have started a couple of years ago are actually taking shape. So it's not just in Singapore, we have expanded through our partners into Thailand, into Indonesia and into Malaysia. So the operating capacity now of Nxera is right about 200 megawatts and looking at up to about 400 megawatts of capacity. By next week, fingers crossed, I think the STT GDC deal will close. And once that is done, there will be an associate, and you will then overlay their footprint, then you're going to have another 12 countries.

And this is going to be quite substantial. And again, if you look at the operating capacity within STT GDC, that will go into about 800 megawatts by end of this FY as well. So with this footprint, together with Nxera, you're going to see close to 1 gig of operating capacity. And with -- if you look forward on planned capacity, it's going to be more than 2.8 gig and beyond.

So if you look at the scale then overnight, the digital infrastructure business has just expanded, very similar to our digital connectivity. And then I move on to digital services, which covers NCS and our digital bank, GXS. So NCS, of course, we are present in Singapore for the last 40 years. And -- but beyond Singapore, we have expanded into Australia and organically grown into China, Hong Kong, and we have a delivery center in India as well.

So if you look at the footprint, it's actually expanding. And if you look at its revenue, it's been growing healthily. If you look at its margin, it's been expanding despite the challenge of AI challenging that particular sector, right? And finally, probably least talked about is the digital bank GXS, our joint venture with Grab, where we think we are 40% equity holder and they are 60%. This is -- again, is beyond Singapore, in Singapore, Malaysia and Indonesia. Of course, superbank is already listed in Indonesia, and -- but we do have Singapore and Malaysia coming along and getting to scale. So you don't hear a lot about this because they are still subscale and getting into a stage where it's breaking even. And in the next 1 to 2 years, you'll see that emerging and breaking even and then it will start to contribute as part of our portfolio.

Digital connectivity, digital infrastructure and digital services all coming together. So as a whole, you see now this is what Singtel represents. And that's why I say it's the biggest misnomer because it's neither Singapore nor telecom solely.

So then the next, of course, the big theme, and I think there's no CEO can today go into a boardroom, talk to investors without talking about AI. And everyone is actually embracing AI, adopting AI. So it's no longer just about doing pilots, doing testing which solution works, which doesn't. It's really embracing it and applying it across all our businesses from digital connectivity, digital infrastructure and digital services. It's actually not just applying it, but also riding on the tailwind of AI because digital infrastructure and digital services really supports and enables AI, not just for ourselves, but for the rest of the various sectors and industries who are all embracing AI.

So that gives us the advantage and the momentum to push us forward. I think this is not the first time you've seen this table of adopter provider enabler. So if you look at adopter, we are really looking at using AI to turn a telco into an AI-led future telco that is making our network intelligent, making our services a lot more intelligent and transforming the operations into an AI-led operations. Obviously, if you look at then provider, NCS is well placed to take advantage of this. We are seeing some early green shoots of how AI or NCS can help governments, institutions and corporates into transforming into AI-powered engines. And finally, digital infrastructure, both on the data center and as well as RE:AI, which is a GPU-as-a-Service layering Paragon on top of it, give us that advantage of riding the growth of AI as infrastructure needs to be keeping up with the demand of AI.

And then if you overlay STT GDC's data center assets onto the footprint and you apply the same sort of potential on RE:AI on top of those assets, that gives us a much larger footprint. So -- so this -- I won't go through this, but if you look at the way we look at AI across the different companies as a user and as a provider, there are a few things that comes in mind. And the way we communicate this is how do you justify investment in AI. Every company say, what's the ROI? What's the ROI? I think we use 3 lens to look at it. Of course, every lens has -- when you come to it, there's a business case behind. 1, return on customer. What's the benefit of a customer you deploy this AI solution. It has to see the difference. The customers have to feel the difference and the improvement. Return on employees, what are you doing to help your employees become super human to become an AI-enabled worker.

So the return on the employee has to be measured. And finally, the return on future. This is extremely important because this gels everything together. It's not just about doing AI on a silo. I'm just doing it for this particular application. Everybody is trying to do on their own AI deployment. But if you then have a future lens to aggregate all your AI solutions, you will find that you can now coordinate the AI deployment, reuse the AI solutions that you have developed and share it with different companies within the group.

So return on customers, return on employees and return on the future. So you stitch these 3 things together and each one of them have a business case behind it, then you get the outcome. You can -- later on, I'm sure in the breakout, Tian Chong will tell you more about the returns.

In the area of customers today, for example, in the call center area, we're already seeing 60% containment rate. That means 60% of the calls coming in now are handled by AI. And it's taken over by AI agents and voice bot chatbots that we no longer need the human to serve.

And what's the best part, they are getting 25% higher CSAT score than the live agent. So basically, the AI is giving return to the customer because it is actually providing better service, faster service, more accurate service and it's giving return to employee because now we are actually reserving the very complex cases to let the life agent, the human agent to serve. So you can see the benefits. And finally, return on the future, a lot of these solutions are reusable. So you train it once, you reuse it on the chat voice and into your sales engines. So the customer information now is centralized, and you keep reusing that data over and over again.

And of course, the market has actually recognized what we have done. If you look at it on the left, Singtel has -- is one of the early companies who have gotten a grant from DISG by the agency to help fund and support our push into AI. It's in the tune of 8-digit support by the government. And similarly, if you look at NCS on the right, they were also early -- one of the earlier companies who got the grant. So both Singtel and NCS have getting -- are getting support from government to help drive AI adoption, AI -- providing AI services.

So you see why DISG didn't just award the group just grant because they see our roles differently. As a adopter user, as a provider supporting other companies. So the different roles NCS and telco plays even in just in the Singapore context. And of course, in the middle digital infrastructure, we are already winning contracts in collaboration with government agencies to enable AI solutions, as we talked about adopter, provider and enabler.

I'm going to go a bit deeper now into Nxera and RE:AI business. I think this was one of the most common questions post our results announcement where Arthur and I went on a road show in Europe and in the U.S., everyone wants to know more about RE:AI, what's the margin, what's the business because we made some announcement back then that we had 11 megawatts, and we are putting in about $600 million of CapEx in the next 2 years to grow RE:AI, which is really a GPU-as-a-Service for Singapore government agencies and enterprises. So just going to lay it down to explain the different models. So for this end of this FY '27, right, which is end of March 2027, from Nxera's standpoint, we're going to get about 230 megawatts of operating capacity. And if you look at it, 98% of them are -- will be fully contracted, 60% is outside of Singapore, which is regional.

When you build this, this is built over the last 3 years because ready for service takes about 3 years to build. Payback usually 7 to 10 years, contracts usually 10, plus 5, plus 5 sort of a range. EBIT margin, roughly 20%. You have to refresh your data center equipment, probably 10, 13 years cycle. Equity IRR, unlevered IRR is about low to mid-teens. So this is the sort of -- this is the model that people who invest in data centers are familiar with, right?

But if you then look at RE:AI, which is a totally different business, first, it has to pay Nxera if he uses Nxera's data center capacity. So this RE:AI is on a stand-alone basis, including its rental of data center rates. And if you look at it, by this FY '27, we're going to get 6 megawatts of capacity. I know we announced 11 megawatt, but that's over 2 years. So by this FY is 6 megawatts. And it's 100% contracted.

So you're going to get all the revenue coming in once it's RFS. The ready for service is 6 to 9 months. That's why we announced it earlier this year, and it's going to be ready for service at the end of the FY progressively. So you're going to start clocking revenue.

EBIT margin is similar, 20%. Tech refresh, a lot shorter because the contracts are 3 to 5 years. So 4 to 5 years, you need to refresh your service that provides GPU. And the equity IRR is also about low to mid-teens. So margins are very similar, but the cycle is compressed. One is 4 to 5 years, tech refresh, 13 years. The other one is 13 years refresh. Payback period, 7, 10 years, 3 to 5 years. So if you turn the RE:AI business, you're going to get a lot more I would say you can cycle your capital twice, 3x on the same thing as opposed to data center, if you look at it, right, because it's compressed time frame to deliver.

Bill will talk a lot more about it in the afternoon in the breakout and you can go and ask him more questions. That's something that we are focusing on. We are committed to this 6 megawatt and next year, the other 5 megawatt, 11 megawatt for Singapore. We are looking at beyond Singapore, what is that going to be, but we have not made any commitment yet. And when we make that commitment, we will tell you, right? We'll let the market know if we are going outside of Singapore. But we are exploring now. So whatever -- wherever is committed, it's really only the Singapore business, right? But there is a market outside of Singapore, and that's where we are looking at it and making sure that it is something that we are very clear and understand the risk and understand the returns before we embark into it. Okay.

STT GDC, yes, fingers crossed. If everything goes next week, they will be closed, and then we can bring them in and associate. The next Investor Day, you'll see Bruno be one of the breakout rooms, hopefully. But this is where it is today. In the last 6 months, if you focus on the bottom half of the table, operational capacity has actually shot up 780 megawatts and 50% contracted capacity. So it is actually contracting very quickly, putting on capacity very quickly. 50 over assets have gone live, right, out of that 117. That's why you see this huge jump in contracted capacity. But of course, there's still a lot in the pipeline. So there's still a lot of growth capacity that is in the pipeline that requires capital. And therein, you see that a glimpse of the pro forma that once it is completed, you'll probably see this in the half year results.

You'll see that there will be some D&A and PPA noncash impact that's coming in, but it's manageable, and that's how we position it. There's also some acquisition financing of about $3.2 billion. Just to give everybody a refresh of memory, this enterprise value of STT GDC is about $13.8 billion when we acquired it. But of course, that was back then. The equity value of about $6.6 billion. But if you really look at how the operational capacity have grown, contracted capacity have grown and EBITDA have grown, it has actually moved quite a fair bit since the acquisition quite a while ago, right? So it has actually improved its performance -- operating performance. So this will be disclosed more in our -- probably our half year results, and you'll see the numbers flowing through. Okay.

And just a refresh of memory, this was last quarter, the first quarter results. I recall when Arthur and I gave the guidance in the FY '27, many of you were saying that we were a bit conservative and why go and guide low to mid- EBIT growth in our guidance. But I think I just want to refresh everybody's memory at that time in May when we announced our full year results, the regulator just announced that they're pulling the plug on the Simba-M1 merger. So we sort of anticipated how bad the market will be in the next 6 months, which actually played out. So if you look at the results of ST SG in the last quarter, if you look at StarHub's results in the last quarter, you know that the market has actually gone a lot -- gone down a lot further because it's not -- there's no consolidation inside and the buyer and seller were checking each other out. And hopefully, you're going to get a deal soon.

And also the ST SG team has done credibly to hold the ground -- hold its ground. And this afternoon, Tian Chong can explain more in your breakout group, how he has defended the market and in fact, grown the market in certain areas, especially in the enterprise space. So that resulted in a 2% EBIT decline for the Singtel SG team. Of course, Optus, Steve, where are you, Stephen? Andy? Stephen is here. Yes, Andy is here. So Optus has done on track to hit -- they hit the 14% year-on-year EBIT growth. More importantly, is expanding the margins. I think that's very important to get Optus back into industry margin rates. the EBITDA margins of the telco in Australia. That's what we need to get to. And in the longer term or medium term, we're going to get our ROIC back to industry average as well. So that's the pace and the discipline that we need to execute for Optus.

And of course, then now moving on to the 2 growth engines. I always give a bit of pressure to my CEOs when Optus was growing at higher double-digit EBIT than NCS, I'd say, hey, you are the growth engine, they are supposed to be the core, but now they have delivered. So Sam has done a very good job in delivering the first quarter, 29% year-on-year growth on EBIT margins and DICo actually have got into a double-digit growth as well. So we're going to see this momentum, especially DICo when we see the Tuas data center is going to be filled progressively the rest of the year, the margin expansion is going to come. right? So the 4 OpCos have been executing well to the plan. And to the regional associates, the 4 of them are all here today, you'll see that they've all done well. If you look at the constant currency, those numbers in bracket, Globe is stable. The rest are actually growing double digits across the board.

I'd like to highlight the currency impact. For 1 quarter, you see that we have got hit about $46 million of adverse currency impact on translation loss. The Sing dollar has gained against all currencies, except the A dollar, which is good. But you will see across the regional associates, we have about $46 million impact in just 1 quarter. Just to give you a bit of context, again, in the last 3 years, the full year currency impact is about $100 million. $100 million each year for the last 3 years. So I start the year off with minus $100 million and we have to work our way up. So we absorbed the currency risk, and we've been able to overcome that in the last 3 years. But this year is going to be harder because it's $46 million in 1 quarter. The good news is it's stabilizing. We are seeing some stabilization, but it will be likely above $100 million.

But I think we will see whether it's stabilizing in the rest of the 3 quarters, right? So that's built into some of our assumptions, and we're just sharing with you some of the challenges.

And Q1 performance as a whole, we delivered our EBIT guidance or ahead of our EBIT guidance on a reported basis, 10% EBIT up, but on a constant currency, 8% up. So a bit ahead of our guidance. As I said, we will relook at our guidance at the midyear. If there's a need to refresh it, we will refresh it. But what is also very important is the original associates continue to deliver very strong growth, 26% on a constant currency and 16% on a reported basis. And finally, if you look at the whole underlying profit, we are up 21% on a reported basis. So this is a very -- I would say, a very strong first quarter results, and we are trying to drive this momentum into the half year and the rest of the year, right?

So Guidance exceeded, on track. So the CapEx, $3.0 billion includes the new growth CapEx that I talked about in RE:AI, the 6 megawatt of capacity that will deliver. And you've seen all the margins that's coming through. And you know that the revenue and the EBIT will come in a lot faster than data center once that is being deployed.

So I don't think there's any change in our forecast or way forward in terms of the conflict in the Middle East is still in the current holding pattern. We just hope it will not go worse and the economy in the regional associates will hold up because I think that's also some pressure because if inflationary pressure is high, then the affordability by the consumers paying for their telco services will be a lot lower. So that is something that we are watching very closely. And I think you can ask the CEOs and CFOs in the breakout groups later. Okay. Thank you very much. I'll hand over to Arthur.

Hi. Good morning, everyone. Thank you all for coming to our annual event. I'll probably take -- continue where Moon left off. I think you heard a lot about the operational improvements and the focus on really improving returns, cash flows and really just the overall business. Now what does it mean for the shareholder, right? And for us, we've always been really focused on what I call the Trinity of the metrics, right? 3 metrics that we've always very focused on yield, growth and ROIC, right? And these 3 have consistently been the focus since the beginning when Moon took over when I took -- became CFO in 2021, when we started the strategic reset. There was always this discussion and debate, should we -- are we a yield company? Should we focus on growth? We're not going to kid ourselves by calling ourselves growth, but we need to really, first and foremost, improve our cash flows and making sure our yield is rock solid and then we start growing.

And at the same time, because we are a very capital-intensive company, return on capital is very important, how hard we work and sweat the capital. So these 3 are the metrics that we will continue to focus on. But I would say at this point in time, we're in a good place where I would argue like any good Singaporean, we want everything, right? We want all of the above. We want yield, we want growth, we want return on capital. And if you look at the yield, you have seen the operational businesses have improved and continue to be in good shape. right? We have to focus on free cash flows and making sure that cash flows, whether it's operational cash flows as well as controlling CapEx because we're in very capital-intensive businesses.

Number 2, we have to really grow the growth engines. In 2021, when we plugged out NCS, when we plucked out DICo, we were a bit shy in really saying there's a lot of growth there.

But I think at this stage, our 2 growth engines have grown up, right? And we will continue to see, hopefully, if they execute well, right, there will be meaningful contributions on the earnings side. And then the third area is really return on capital because at the end of the day, we may work very hard and improve the numerator, but the denominator needs to be controlled as well, meaning CapEx, right? And that's something across our capital-intensive businesses, we have to watch that. Now how can we have all of the above? I think there are companies who have achieved that to make sure that all 3 can coexist together. It's really underpinned by operational improvements and at the same time, creating shareholder value that's underpinned by what we call our capital management framework, right? And I would really talk about our capital management framework across 5 levers.

The first 2, that's hygiene, right? Making sure that every investment we make, every CapEx we make, it meets hurdles, it meet your investment hurdles, improving our operations at the OpCo and our regional associates. The second one is, of course, balance sheet. We need a rock-solid balance sheet, especially for the businesses that we are in. Right? I think you all might have seen Singtel first time since we were rated about 26 years ago, we were upgraded by S&P. And that these 2 hygiene is definitely what we need to do. The third area is something that we have started doing maybe about 3, 4 years ago, and that's really looking for capital partners, right? And I think with the KKR partnership, it was actually a very successful partnership. We've done 3 major transactions with them or 2 big ones, of course, the Nxera partnership, the first phase of STT GDC and then the second phase of STT GDC.

And it is really because I think you all have heard me say, as a listed company, listed capital, public capital cannot be used to fund data center businesses because of the long gestation period. We need private capital to ride with us during the negative cash flow period. Once it stabilizes, once it's generating EBITDA, then public capital can actually fund it because I can't -- if we are building up a big data center portfolio, I can't come to all of you and said, we're going to hold back dividends for 3 years before we see it cash generating. So that's why we rely on private capital.

So the third area is something that we have started 3, 4 years ago and it continues. The fourth point is what I want to talk about fourth and fifth today is you've heard about our capital recycling program. I want to be very clear, capital recycling or asset recycling is not just about asset sales and monetization. I will talk about that later.

And then finally, which is something new is we are exploring permanent capital pools where we can actually say one day, right, our public -- our private capital partners might decide to move on, right? Because the horizon is usually a 7- to 10-year horizon. What do we need to do to prepare to make sure that we can continue this focus on yield, growth and return on capital.

So public capital or permanent capital is something that we are looking at, and we'll share more about our ideas, but it's something that we'll be exploring over the next year or 18 months. So on the first point, right, about asset recycling, the approach that we are taking is, first and foremost, looking at how it's not just asset monetization, but it's also asset rotation. How do we look at moving from maybe certain businesses that have lower return to one that has a bit of higher return. But the first and foremost on ROIC is, number 1, as you said, what we call the organic ROIC.

When we started the strategic reset in 2021, right, we looked at the -- all the businesses at the Singtel Group. Each business, we look at the capital that we committed and what the return is on that capital. And we realized there were 4, okay? I will share with you. Some of you might know this, Trustwave and Amobee. Those 2 are gone, right? Those were negative ROIC businesses. The third one, interestingly was Airtel, right? Because at that time, we were just coming out of a crazy period. I think, again, people who have been following us know this. But we were very confident that Airtel and the team will deliver. And today, they have actually moved from a very low ROIC business to the mid-tier, right, 10% to 20%, which is an outstanding achievement. The fourth one is Optus, right? Optus, you might recall, went through a very difficult time. In fact, the ROIC at that time, this was before Stephen, right, and Andy, it was around maybe about 2% ROIC, right?

We have made it very clear we need to improve the ROIC of Optus. So it's moving in the right direction. It is still in the less than 10%, but it will -- because, I mean, you all know the challenges in Australia. But it has actually almost doubled the ROIC since from the beginning, right? But it is more work to be done. But what I'm making out here is in addition to the operating organic ROIC, which we are all very focused on, we are also looking at it from a portfolio perspective because all this, when we add up, gives us our 11.1% ROIC today as a group. right?

So it's like many of you when you look at it from a portfolio basis. Now for most of you all, it's easy because if you want to exit, you just sell in the market overnight, done. For us, we are business operators, right? We cannot just say exit and we go in and all that. I mean to go back into a country and the telco business today is almost impossible.

But we need to really look at how we shape our portfolio to drive returns for our shareholders. So this is what we mean by capital management. There could be times when we move out of a certain asset of a certain business, not exit, but lower the return -- I mean, lower the stake and then move to a higher return business. I mean, an example that we have done is AIS. About 18 months ago, we saw opportunity in AIS, right? We took some capital off the table from another asset and we put it into AIS and we built our stake in AIS.

I remember we went in at about THB 290, THB 295. Today, it's trading well above that number. So this is what we mean by asset reallocation and not just asset monetization. And this is very important because we are going into RE:AI. We are going into the data center business. It's not just about borrowing. It's not just about putting cash on our balance sheet and funding the business.

We need to be a bit smart about reallocating our capital as well so that we can actually focus on the Trinity of metrics, yield, growth, ROIC.

The second approach of asset recycling, it is narrowing the SOTP discount. First presentation as CEO and the CFO at first slide and first presentation that Moon make, I remember, is that we need to fix the SOTP discount that Singtel suffered. Now unfortunately, today, the SOTP discount still exists, but it has narrowed quite significantly. Not only has it narrowed, I would say the red bar, the sum of the parts has actually improved, right, across a variety of reasons. We can discuss that more in another session. But this is very important. And how do we think about it? Now all of you may think, oh, is Singtel selling out, getting out of India, getting out of some of our associate countries? Absolutely not.

I've always said this, if you look today at the shareholders' agreements that we've had, we've entered into, and the shareholders' agreement last almost 30 years for many of our associates and our partners, there is a minimum threshold of shareholding, below which Singtel loses a lot of shareholder rights. But I can tell you that minimum threshold today versus what we own today is above yes, and it's meaningfully above that strategic threshold.

So my point has always been from here to here, we should look at it purely from an economic lens. If the intrinsic value or if the alternate use of capital can be better put to use, we could look to shave off and reallocate the capital, right? If the earnings yield of an asset is lower than if we take that capital and buy back our shares, right, which is there's a certain dividend yield there. If that makes sense, we will do it. Only if we hit this strategic threshold, only then should we look at it purely from a strategic lens.

That means if we decide today that we are getting out of a certain country for a whole variety of reasons, then we will go below the strategic level. But today, I assure you, the 4 countries that we are in are completely -- we are 100% committed to these countries. So from here to here, it's purely economic, but we are in no hurry to monetize. And you have seen we've done it in a very disciplined fashion, and we will continue to do that. So really, that's our concept of what we mean by asset recycling, a reallocation of capital, a reallocation of assets, but it is also done to remove or to minimize the SOTP discount that we suffer from.

The other area, which I talked about is permanent capital pools. This is something we are exploring. And I'm giving this example here. Nxera is the example. Now Nxera one day bought an asset, for example, there will be assets in the portfolio that would stabilize and generate cash flows.

We have said EBITDA from Nxera will look to double in the next 18 to 24 months. When we reach that point, right, what we care about as a listed company is what I call YieldCo. These are cash-generating assets. Now we will look at opportunities where we could house it, where we get the best return on capital. So it could be a REIT, right? We could get tax efficiencies. We could even get new management fee revenue streams that we get, which I think you all know can be quite substantial for big assets.

So with that, we would look to perhaps even own more of that because at the end of the day, that fits our -- what shareholders are looking for. At the same time, the Development Co is something that consistently needs to grow with a pipeline. But do we need to own a majority of that? Perhaps not. That is something perhaps more suited for KKR or any of our private capital.

So this is how we look -- we could perhaps fund growth in capital-intensive industries like data centers, where you have this stable YieldCo that's cash generating. Sometimes that cash where it goes can be used to fund further acquisitions and further development. And as we grow that, we can then use this as a meaningful vehicle to monetize. We could own majority of this, and we may not need to own majority of this because we don't need to consolidate. And this is really, yes, we are developers, but at the same time, the balance sheet load for such a capital-intensive business, layering on the telco business, both could be something that we do not want to take. So this is something that we are exploring. And this is what we mean by a permanent capital pool. Now of course, the other alternative is just to build maybe a listed platform entirely.

There is no REIT or nothing like the entire company or we could enter into permanent or more longer-term joint ventures with partners, no different than what we have done in India, Thailand, Philippines and Indonesia. So this is something we are thinking about, and this is a fifth lever of our capital management approach. The other thing is STT GDC. I think Moon did talk about it. I won't spend too much time, but this is a big business, right? We have taken 25%. And if it closes next week, it will be an associate of ours. But there's nothing -- but there is actually 2 opportunities where, number 1, there's ability to optimize our capital. Together with our partner, we will be very disciplined in terms of speculative CapEx. We do not believe in the field of dreams where you build it and hyperscalers will come, okay? We need to make sure we secure contracts before we actually build.

Of course, there will always be the element, a small amount of speculative CapEx, which we need to do. But that's something we have to control and be very disciplined on. The second element is value creation. If you look at GDC, the portfolio, there are actually 3 different portfolios. We have already announced that there are plans to IPO India. We believe that the best form of capital we can tap is locally. That means India for India. If we list the whole company, I can tell you whether we do it in the U.S. or in Singapore, there will be a discount because people might be concerned for different geographies. Like in Singapore, they may not understand India and then they apply a discount if we list in Singapore. But if we list in India, India for India, and I think you have seen some of the numbers that have been thrown out, but this is something we are exploring, and we believe in it, and we will continue to do that.

Europe and U.K. is our large-scale AI -- it's a very large platform in the U.K. and in Germany. I think with the events that we are seeing relating to sovereign AI, I think we're quite optimistic about the prospects there. But again, that's something perhaps we could look and decide what we want to do with that. We have that flexibility.

Singapore and Asia is our home ground. Right? And it's something we could explore in the future what we want to do with that portfolio. I think you have heard recently, GDC was one of the 4 parties that recently won the CFA2. So I think it's further good news for us if we can complete this transaction next week. So this is really the opportunity set that we are seeing. What does it mean for us, right, at Singtel? We talked about our ST28, we talked about reaffirming our guidance, right? But I also want to share, right, beyond ST28, is this whole plan sustainable? Can it be done?

So if you can indulge me 3 more slides, I can show you or I can maybe disclose a sense of what the world can be for Singtel, right, beyond 2030. And we would like to, of course, first of all, see this continue to be going up in 1 direction, which is our dividends. So let's start with -- if you look at our dividends and growth, it is really underlying profits plus the VRD. Underlying profit is based on 2 things: OpCo EBIT and associates performance. So let's start with OpCo EBIT. So if you look at our 4 OpCos, let's start with Optus. I think Optus, you look, it's about $500 million plus fiscal year '26 EBIT. If you just make an assumption, and I would like to call out, these are -- this is not guidance. This is what could be the world that we see for Singtel in 2030, right? $0.5 billion of EBIT now.

2030, if you believe that Optus can match the peers in terms of EBITDA margins because I think today, Optus -- when Stephen took over the business, it was like 27%, 26% EBITDA margin. Today, I think it's about 29%. But if our peers were trading, including TPG at 33% to 35% if you believe that we should be matching around that EBITDA margin level and if you believe that the ROIC, we believe we should at least go up to around your cost of capital, which you should, right? Any decent business operator, CEO, CFO, need to make sure that's the case. There's a potential upside of $500 million to $600 million, okay?

Then you look at DICo. We talked about the doubling. Just looking at the assets we have today and the contracts we have with RE:AI, that's perhaps another $200 million of EBIT contributions that is coming.

Tuas alone, EBITDA, we're saying will look to double right from where we were. But as we actually grow the business with operating capacity coming in with fresh contracts that are being renewed for our other data center contracts, there is an ability of growing $200 billion. This does not even include CFA2, which we didn't win, okay, which Nxera didn't win, but it does not include additional contracts that we are pursuing for RE:AI. It does not include any REIT fees or anything like that because we have not factored that in. But that alone is $200 million of EBIT contributions. So of this, you have $500 million, DICo $200 million, NCS. NCS today is going through a quiet transformation. Maybe after this today, NCS may not be that quiet anymore, right, because Sam will be talking a lot about the story. But the quiet transformation is focused on delivery margins, making sure that we execute within the cost that we have assumed and we execute getting a decent margin. Just simple disciplined execution.

The other thing is really pivoting ourselves towards helping enterprises adopt AI because I can tell you that's a nightmare for many companies. And adopting AI is not just giving ChatGPT to your employees, as I think all of you know. It is really embedding AI into the day-to-day services. And how do you actually embed AI? You have to think about data. How do you make sure that the AI agents tapping data is not the entire pool, it's not a free for hall for these agents. How do you organize that? Most of us in Asia have the flexibility of using Western LLM models or even the Chinese models. How do you make sure they all talk to each other? This is where NCS is coming in. And NCS is fortunate because one of the biggest customers is the Singapore government. I mean, when I talk about government, it means a lot of the agencies and everything. And NCS is extremely plugged in to that business.

So there is potential upside. And we are seeing, okay, let's call it, $150 million. You just assume 10% to 12% growth, steady growth. They did 29% in fiscal year '26, but let's be conservative. Let's say, 10% to 12%. That's $170 million of additional EBIT to 2030. And then let's talk about Singtel Singapore, which today is the largest contributor of our EBIT. But let's say, nightmare scenario. Our competitors continue to create a lot of price war and price erosion and everything. And -- but at the same time, on the enterprise side, Tian Chong executes really well, right? And we can actually meaningfully get business. But let's say that EBIT doesn't change at all. That means 0% growth, okay? That's a very -- I'm not saying it will be, but I'm saying -- I mean, it's a very conservative estimate. So we have $1.5 billion today. We have a very clear path to delivering $2.1 billion to $2.5 billion of EBIT by 2030 based on the assumptions that you see.

If you just extrapolate the midpoint, let's use $2.3 billion. That's a high single-digit to a low double-digit EBIT growth year-on-year. Now this is not guidance, okay, very, very clear. So all the analysts, please look at this, okay? But if you believe the assumptions, right, the EBIT profile is actually quite -- I mean, it's quite clear, right? But the key caveat is every one of us within the Singtel Group needs to deliver, right? So these are the assumptions that we have laid out.

So this is something I want to put it, what could be 2030 -- what could 2030 look like, right? And then after that, you have to make the call and assess us management, whether we can deliver. Let's move to the associates. The associates today, I think mobile business, I think, is doing well. It continues to do very well. The fundamental growth of mobile continues.

Despite the Hormuz crisis, we have seen that many of the customers in the emerging markets still view telco services as necessity. So the data consumption continues to hold strong. And I must give credit to our associates, many of them immediately adopted cost-cutting measures. And that's why you've seen even the first quarter results. And you will see their margins continue to hold despite the crisis that you are seeing, whether it's oil related, inflation or Hormuz crisis.

In addition to mobile, which, as you know, all 4 of them are very predominantly mobile. Many of them have adopted fixed broadband capabilities. T-Cell, AIS, right, is #1 broadband player today through acquisitions. Globe and Airtel is doing an organic build, and they are giving their competitor a bank -- a good fight, right, and a good bang for the buck. And then there are other types of particularly the enterprise business and data centers, which they are putting capital to work.

So there is a second spurt of growth coming, right, for the associates if the execution is done well. So we talked about EBIT, we've talked about associates leading to underlying profits. Then we talked about capital recycling, okay? I'll caveat again. This dotted line is the dotted line. It is not guidance. We are still keeping to our $9 billion target. But I think many of you know that we can go way beyond $9 billion. Okay? We have publicly said that we will look to equalize our stake with Sunil. That's a few billion dollars, right? But we are in no hurry to do that. You all also know, again, we have publicly said this, Gulf is -- I mean, Gulf is not in the telco business. We own today's stake is probably worth about $2.5 billion. And then we've got other things, including non-listed associates, including real estate and many different noncore assets, which we can tap on.

Now that number, I would say, is a double-digit billion dollars, but we are not giving guidance. We are not raising our target. But again, this is what could come. Right? We have ample headroom to actually continue our VRD. Why are we not doing it? We are doing it in a very conservative and measured way because, again, we are operating in one of the most volatile periods in history, and I'm not exaggerating.

So we want to do it methodically. We want to do it responsibly. We will grow, but we will grow on a sustainable basis. So there you have it, yield, continued focus on execution, improving our OpCo EBIT, getting more dividends from our associates, right? And you have seen our associates are growing our dividends. Number 2, right, growth. Our growth engine is executing very well. We need to focus on digital infrastructure, IT services, leveraging on the tailwind that we're seeing in AI.

And then return on capital, absolutely important. We need to continue to ensure that the numerator grows and the denominator is controlled, right? With that, I think we could end the conversation and we invite Moon and Liang to come up for the panel. Thank you.