Singtel raises profit guidance, says impact from Nvidia-related developments is "fairly limited"

Singtel said it is largely insulated from developments related to NVIDIA Corporation (NVDA.US), with only a small portion of its data center compute capacity leased to new cloud customers that are or may be linked to the chipmaker. "I think the impact on us is fairly limited," Group Chief Financial Officer Arthur Lang said in an interview on Friday, adding that Singtel is closely monitoring the situation. Lang said less than 5% of the company's data center capacity is leased to new cloud customers that may be associated with NVIDIA Corporation. More than 80% of its data center resources are located in Singapore, with tenants mainly comprising enterprises, banks and government agencies. As demand for artificial intelligence and enterprise cloud services climbs, Singtel continues to ramp up its digital infrastructure business. Lang said the company adopts a steady and prudent expansion strategy, prioritizing investment in projects with secured customer contracts and funding them through its own balance sheet and bank financing. Benefiting from solid first-half fundamentals in its Australian operations, technology services and digital infrastructure segments, the company raised its full-year profit guidance. It now expects core operating profit to grow at a mid-to-high single-digit rate in the fiscal year ending March 2027, compared with previous guidance of low-to-mid single-digit growth. After the results were released, Singtel's shares listed on the Singapore Exchange rose as much as about 3%, marking their biggest single-day gain since August this year. In the six months through September, the company's underlying net profit rose 10% year on year to S$1.49 billion (about US$1.2 billion). Reported net profit fell 55% to S$1.54 billion, mainly because the year-earlier period included one-off gains from the disposal of a stake in Bharti Airtel and the merger of Intouch and Gulf, with no comparable gains recorded this period. Singtel's growth is increasingly reliant on businesses outside its home market, including Australian telecom subsidiary Optus, technology services arm NCS, and its continuously expanding data center and AI infrastructure business; it also holds stakes in several leading Asian telecom operators. Optus benefited from higher mobile tariffs and growth in prepaid users, with mobile service revenue up 2.9%. NCS also performed well, with continued expansion in its homeland security business and a recovery in demand for AI and digital resilience-related projects. Its Digital InfraCo unit benefited from buoyant data center business conditions and expansion of its AI cloud business. Competition in Singapore's domestic market remains intense, with mobile service revenue down 1.6% year on year. "The inflationary environment and weaker regional currencies mean challenges remain ahead. The group will maintain strict execution discipline and cost control, and steer steadily through a complex environment," Singtel said in its announcement.