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Singtel CEO's pay nearly halved to S$3.5m

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Singtel's group chief Chua Sock Koong earned S$6.1m the year before and this was her lowest pay-out since 2009.

Singapore

SINGTEL'S group chief has seen her pay cheque hit a decade low, with Chua Sock Koong's earnings nearly halved, after the mainboard-listed telco suffered an annus horribilis.

Meanwhile, the company doubled down on its digital transformation strategy, according to news in its annual report released on Wednesday.

Ms Chua's package came to S$3.5 million in cash and benefits, down from S$6.1 million the year before. It was her lowest pay-out since 2009, when she made nearly S$3.4 million.

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The pay cut came as Singtel's underlying full-year net profit, shorn of one-offs, fell by 21.4 per cent year on year to S$2.83 billion. Ms Chua noted "tougher industry and business conditions", such as industry disruption and frenzied market competition.

But Singtel's leadership confirmed long-running market chatter about plans for its fast-growing but loss-making digital businesses, such as a potential initial public offering (IPO).

Chairman Simon Israel told shareholders that the transformation involved "calculated investments in new businesses that would thrive in the future economy", such as cybersecurity arm Trustwave and digital marketing units Amobee and Videology.

"Your board is aware that the value of these investments is not being recognised in our share price and management intends to unlock this value at the appropriate time," he added.

Group digital life chief Samba Natarajan said that "value realisation" for units such as Amobee and video streaming platform Hooq - which is becoming an area of focus for the group - could involve an IPO, or new strategic partners taking stakes.

Singtel is already tackling another IPO: Airtel Africa, part of Indian telco associate Bharti Airtel, which plans to debut on the London bourse at 80 to 100 pence a share, or a valuation of up to £3.62 billion (S$6.21 billion).

Otherwise, Singtel's cybersecurity business clocked widening losses before interest and tax, to the tune of S$102 million for the 12 months to March 31, according to the group's latest full-year financial results. Losses before interest, tax, depreciation and amortisation more than doubled, to S$43 million. But cybersecurity operating revenue was up by 4.1 per cent on the year prior, to S$549 million.

Digital life advertising units Amobee and Videology also posted a larger pre-tax loss of S$42 million - with earnings before interest, tax, depreciation and amortisation down to S$1 million, from S$31 million previously - even as operating revenue grew by 11.9 per cent to S$1.2 billion.

"Analysts have generally been expecting an IPO or partial stake sale in digital life or one of its business components as part of management's efforts to create additional value for its shareholders," Maybank Kim Eng stock watcher Luis Hilado remarked.

"The traditional telco business is valued on a different basis from emerging digital businesses, so a market transaction would help solidify a valuation for investors."

Citi analysts Arthur Pineda and Hussaini Saifee have called Singtel's digital assets "quite sizeable", and said in a report late last month that "any move to unlock value in these assets via flotation or strategic partner entry could serve to crystallise value" by as much as S$0.14 a share.

The Amobee subsidiary paid US$101 million for Videology in a mid-2018 auction, amid a bankruptcy restructuring. Some months later, Singtel pooled its group-wide cybersecurity resources under the Trustwave brand, which it bought in 2015.

Mr Natarajan has also noted that Singtel is tapping venture capital fund Innov8 to build up its digital business footprint with stakes in "emerging growth companies", on top of acquisitions and organic growth.

Besides Ms Chua's slimmer wages, Singtel has been looking elsewhere for cost control too, including staff expenses, which were slashed by 5.9 per cent in the latest fiscal year.

Key Australian subsidiary Optus, which made headlines for layoffs last year, had some 1,200 fewer places.

Headcount shrank by 8.4 per cent to around 23,300 employees worldwide, after a roughly stable workforce in the past two years, on what Singtel has said was staff restructuring.

Singtel has also said that its digitalisation and automation efforts are expected to save some S$490 million in the fiscal year to March 31, 2020.

The counter closed up S$0.02, or 0.58 per cent, to S$3.50 on its cum-dividend date on Wednesday, after the company report was released.