Singapore operator Singtel announced that its profit improved for the first half-year as its underlying business grew on the back of accelerated digitalisation and a restart of the economic and business activity across the region. Underlying net profit increased by 17 percent to SGD 983 million in the six months to September, driven mainly by Airtel’s robust turnaround, Singtel said. With lower exceptional losses, net profit more than doubled from the same period last year to SGD 954 million.
Operating revenue climbed 3 percent to SGD 7.65 billion, boosted by higher mobile service revenue in Australia and strong ICT growth from higher digital services revenue for NCS and also data centre revenue. NCS has changed its revenue mix significantly in the first half, growing its digital revenue by 36 percent, which now contributes 48 percent to total revenue.
Singtel also reports that its regional associates delivered a resilient performance despite intense competition and a resurgence of COVID-19 in their markets with a 21 percent increase in pre-tax contributions to SGD 1 billion. This was due mainly to the turnaround in Airtel with double-digit increases in operating revenue led by mobile growth in India from customer growth and 4G upgrades. Airtel also delivered improvements in its African business. In Indonesia, Telkomsel saw growth in data and digital services which partially offset weakness in its legacy business, parent company Singtel also said. AIS in Thailand and Globe in the Philippines saw increased demand for broadband services although these gains were offset by higher network and spectrum investments.
The Singtel Group ended September with free cash flow of SGD 1.77 billion for the half year, which represent s a growth of 4 percent, mainly due to higher dividends from the associates.
Australia Consumer business
In Australia, Optus reported an EBITDA increase of 5 percent, driven by mobile business growth. NBN migration revenue fell to AUD 51 million from AUD 209 million in the last corresponding half year as the migrations neared completion. Excluding NBN migration revenue, operating revenue was up 1 percent. The increase was due to growth in mobile service revenue of 10 percent. Equipment sales revenue fell 4 percent on a slowdown in shipments due to global supply shortages and lower retail footfall.
Singapore Consumer business
In Singapore, operating revenue fell 1 percner, mainly due to a contraction in mobile equipment sales as a result of supply disruptions caused by global chipset shortages. Mobile service revenue was stable as the growth in 5G adoption was offset by lower voice and the decline in prepaid from a smaller population of foreign workers. Roaming revenue remained muted. Fixed broadband revenue rose 4 percent due to an expanded customer base, increased take-up of higher speed fibre plans and higher WiFi mesh equipment sales. Excluding Jobs Support Scheme credits, EBITDA improved 2 percent.
Group Enterprise
Group Enterprise’s operating revenue was stable year-on-year, Singtel said. ICT revenue grew 10 percent, mainly driven by higher demand for data centres and cyber security services. Carriage services revenue, however, declined 3 percent as a result of a decline in fixed voice revenue from lower voice usage and switched voice business. Data and internet revenue fell 2 percent due to competitive pricing pressure while mobile revenue remained stable. Excluding Jobs Support Scheme credits, EBITDA was stable.
Board approves interim ordinary dividend of 4.5 cents per share
Singtel’s board approved an interim ordinary dividend of 4.5 cents per share for the half year ended 30 September 2021, totalling SGD 743 million which represents around 76 percent of the Group’s underlying net profit for the first half year. The Group expects to pay dividends at the upper half of its dividend policy range of between 60 percent and 80 percent of underlying net profit for the financial year ending 31 March 2022.
FY outlook
Singtel Group affirms the guidance for the current financial year issued in May 2021. Dividends from the regional associates are expected to be at least SGD 1.3 billion for the financial year ending 31 March 2022. Capital expenditure including 5G networks is expected to reach SGD 2.4 billion, comprising AUD 1.5 billion for Optus and SGD 800 million for the rest of the Group.
