Singtel's FY net profit plunges 65% on charges for regulatory costs at Airtel

Singapore operator Singtel’s operating revenue decline 2 percent year-on-year in constant currency terms to SGD 16.54 billion for its fiscal year ended 31 March 2020. The decline was mainly due to lower mobile service revenue and equipment sales, and the onset of the COVID-19 crisis in February this year. Underlying net profit plunged 13 percent, affected by declining revenues at Singtel’s Australian unit Optus, due to continuing data price competition and weak consumer sentiment, and the effects of lower equipment sales and margins and low NBN resale margins.

Net profit fell 65 percent to SGD 1.08 billion due to Airtel’s exceptional charges for regulatory costs, including the adjusted gross revenue matter and a one-time spectrum charge. Singtel took a net exceptional charge of SGD 302 million this quarter, mainly arising from Airtel’s provision for the spectrum charge. 

Singtel’s regional associates continued to drive data usage growth, with pre-tax contributions rising 29 percent to SGD 500 million this quarter and 15 percent to SGD 1.64 billion for the full year.

Free cash flow rose 4 percent to SGD 3.78 billion for the full year with the impact of changes in accounting standards, positive working capital and lower tax payments.

Singtel’s Group Consumer business in Australia, revenue declined 8 percent for the quarter. The NBN broadband customer base rose by 45,000, driving an increase in traffic expense and adverse margin impact. EBITDA fell 22 percent due to low NBN resale margins.

In Singapore, mobile service revenue declined 12 percent for the quarter as roaming and prepaid services were impacted by travel restrictions, fewer tourists and foreign workers respectively as well as continued voice erosion. The supply disruptions for certain handsets and weaker consumer spending also caused a steep decline in equipment sales. Revenue from fixed services rose 2 percent with the continued growth in broadband and TV. EBITDA was up 5 percent, a result of tighter cost control and wage credits.

Group Enterprise revenue also declined by down 5 percent for the quarter due to the decline in mobile service revenue from roaming, and equipment sales. Cyber security revenue was up 1.9 percent with growth in Asia and the US offset by weaker performance in Australia where revenue was boosted by a large contract in the same quarter last year. Overall EBITDA rose 5 percent on strong revenue and margin growth in ICT services, wage credits and lower staff incentive accruals, which offset declines in Australia.

The Board is recommending a final ordinary dividend per share of 5.45 SGD cents. This reduction in dividend payout is prudent to conserve financial headroom to cope with uncertainties in the current COVID-19 operating environment and the capacity to invest in 5G, Singtel said. This brings the total ordinary dividend per share for the year to 12.25 cents and represents a payout of approximately SGD 2.0 billion.