‘Renewed confidence’: Singtel lifts FY2027 guidance as underlying profit grows 10%, net profit falls 55%

[SINGAPORE] Singtel on Friday (Nov 13) raised the FY2027 growth guidance for its operating companies’ (Opco) earnings before interest and taxes (Ebit) to between mid and high single digits.

This was an upgrade from the guidance of low to mid single-digit growth it gave in May this year, and the second year in a row that the telco has raised its Opco Ebit guidance at the half-year mark.

The revision came on the back of an 8.7 per cent rise in first-half Opco Ebit to S$902 million.

The growth was led by strong performance by Australian subsidiary Optus, tech service provider NCS and its digital infrastructure arm Digital InfraCo.

Optus Ebit rose 13.7 per cent to A$322 million (US$220 million), NCS’ rose 15.5 per cent to S$212 million and Digital InfraCo’s rose 25.3 per cent to S$51 million.

Arthur Lang, group chief financial officer of Singtel, said at a media briefing of the company’s H1 results on Friday that the telco was entering the second half of the year “with a renewed confidence versus six months ago”.

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His comments came even as the telco reported a 54.7 per cent drop in net profit to S$1.5 billion for H1 ended September, in the absence of exceptional gains recorded the previous year. Underlying profit for the period was up 10.4 per cent at S$1.5 billion.

Lang said that when the group set its initial set of guidance in May, the Strait of Hormuz crisis had just broken out and inflation was a concern.

Moreover, the proposed merger of Simba and M1 had just been called off, adding a new degree of uncertainty.

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In addition, Singtel said that it was also reviewing its capital expenditure guidance of about S$3 billion.

The group expects capex to be lower than initially estimated on the back of disciplined capital allocation.

Singtel Singapore Ebit down

However, Singtel Singapore’s Ebit was down 4.5 per cent as a result of the absence of one-off income recorded in the corresponding period the previous year.

Excluding the one-off, Singtel Singapore Ebit was down 1 per cent.

Singapore mobile service revenue grew 3.8 per cent in the second quarter from Q1, its second consecutive quarter of sequential growth.

Group CEO Yuen Kuan Moon said this followed seven quarters of decline.

Average revenue per user rose to S$23 for the quarter ended Sep 30, from S$22 the previous quarter.

The telco attributed the rise to its three-brand strategy of Singtel, Gomo and hi!.

“We are not interested in going after just the pure volume of subscribers,” said Ng Tian Chong, CEO of Singtel Singapore.

Optus stake sale still on the table

In July this year, Singtel confirmed that it was in discussion with interested parties to sell a stake in Optus.

Yuen said Singtel’s search for a minority “like-minded Australian partner” for Optus was still ongoing.

However, given the strong performance of Optus, Lang noted that a stake in the company will not be available “at any value”.

Earlier media reports noted that New Zealand-based infrastructure investor Morrison was in talks to buy a minority stake valued at more than A$2 billion.

H1 earnings

Singtel said that its H1 FY2027 net profit decline was mainly due to the absence of S$2.2 billion in net exceptional gains recorded a year earlier from the partial sale of its stake in Airtel and the Intouch-Gulf Energy merger.

Excluding exceptional items, underlying net profit rose about 10 per cent from S$1.4 billion a year earlier.

The group’s operating revenue rose 5.5 per cent to S$7.3 billion in H1, from S$6.9 billion in the year-ago period.

In constant currency terms, revenue would have increased 1.4 per cent, while underlying net profit would have grown 15.9 per cent, Singtel said.

The board approved an interim dividend of S$0.09 per share, comprising a core dividend of S$0.071 and a value realisation dividend of S$0.019. This was 10 per cent higher than the S$0.082 per share declared a year earlier.

Shares of Singtel closed S$0.04 or 1 per cent lower at S$4.11 on Friday.