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Singtel cut dividends in the past year to manage its leverage in view of the weak operating performance and high capex. As such, Chong has forecasted dividend payments to reduce to $1.3 billion in FY2021 ending March, from $2.9 billion in FY2020, and expect a dividend payout of 85%-90% of net profit from FY2022. Meanwhile, Chong also believes that s Singtel’s 5G priorities will drive capex over the next three years, as its 5G rollout in Singapore is bound by regulatory requirements to reach 50% islandwide coverage by end-2022. 5G expansion in Australia however, is likely to be business-driven, but a growing focus on mobile services could keep capex elevated.
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On the back of ongoing travel restrictions, Chong is expecting EBITDA to see a slow recovery as roaming revenues remain affected. Fitch expects Singtel’s EBITDA to decline by mid-to-high teens in FY2021. Near-term EBITDA recovery is likely to stem from the revival of enterprise revenue and the group's cost-saving initiatives. As at 11.55am, shares in Singtel are trading at $2.35.