SINGTEL : Z74 0% on Thursday (Nov 9) posted an 82.6 per cent rise in net profit for the first half of 2023, supported by an exceptional gain from regional associate Telkomsel’s integration of IndiHome, a fixed broadband provider in Indonesia.

Net profit for the six months ended Sep 30 stood at S$2.1 billion, compared with a net profit of S$1.2 billion in the same period last year. The results translate to an earnings per share (EPS) of S$0.1294, compared with an EPS of S$0.0709 in the year-ago period.

Operating revenue, however, was down 3.2 per cent year on year to S$7 billion from S$7.3 billion. The group’s results were “adversely impacted” by the strength of the Singapore dollar against the Australian dollar and regional currencies, said Singtel in its results announcement. 

In constant currency terms, operating revenue would be 1.5 per cent higher. Singtel attributed the improvement to strong showings from NCS and Digital InfraCo which offset weakness in the group’s Singapore and Australia enterprise business.

The board has approved an interim dividend of S$0.052 per share for the half year period – 77 per cent of the group’s H1 underlying net profit of S$1.1 billion, which was up 12 per cent year on year.

The group also revised its dividend policy to raise the payout range to between 70 per cent and 90 per cent of underlying net profit, from 60 per cent to 80 per cent. The dividend will be paid on Dec 8 after books closure on Nov 21.

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At its earnings call on Thursday, Singtel group chief financial officer Arthur Lang attributed the move to raise the dividend payout in part to its capital recycling efforts. He noted that the company has recycled, in a short span of time, about S$5 billion in assets, which is more than what was announced as part of the company’s strategic reset launched in 2021.

“Our interest expense has come down, our debt has come down, the cash balance has gone up, so we do think we’re in a stronger position after two-and-a-half years of the strategic reset,” he said.

At the same time, the group announced that it intends to monetise an additional S$4 billion in assets in the next two to three years, although it declined to give specifics on what assets could be monetised.

Singtel group chief executive Yuen Kuan Moon added that the focus now is on rapidly scaling up the group’s growth engines, and that Singtel expects its strategic partnership with KKR to accelerate the expansion of the group’s regional data centre business in Asean.

In addition, he announced a programme to drive a 15 per cent reduction in core costs over the next three years. This would come up to about S$200 million a year from FY2024 to FY2026.

He said that the company will aim to be more efficient by reducing the number of vendors, and rationalising its networks to make it simpler to maintain and manage.

The company’s workforce will also be optimised as the organisational structure of its Singapore and Australia businesses has been simplified to hold their respective markets’ consumer and enterprise divisions, removing duplication.

Still, the company has observed weakness in certain areas.

Singtel Singapore chief executive Ng Tian Chong noted that enterprise operating and capital expenditures have fallen as a result of the weakening macroeconomic climate.

“The reading is that the macroeconomic situation, along with a high interest rate that affects big corporations and spending appetite, I think, will be here to stay for a while,” he said.

Still, he said that the company has gained strong traction in connected cars, with four major brands, including Tesla and BYD, signing contracts with the company.

Ng said that the brands pay for access to Singtel’s network to deliver firmware updates and other connected services to drivers. The company also works with its partner telcos under Bridge Alliance, to offer connections to cars in different countries.

He added that over time, the company may be able to offer drivers other services and features, such as entertainment offerings.

As for the outage that Australian subsidiary Optus experienced on Wednesday, Yuen said that the company is focused on taking care of the customer and investigating the root cause of the incident, and that it is too early to tell how customers will respond.

Lang added that the company will make further announcements if there is any financial impact due to any regulatory moves as a result of the outage.

The outage affected some 10 million Australians, leaving them without mobile data, broadband Internet and landline services for much of the day.

For the half year, Optus’ revenue rose by 1 per cent year on year to A$4 billion (S$3.5 billion).

This came on the back of a 3 per cent increase in mobile service revenue due to stronger net connections, led by prepaid, and higher postpaid average revenue per user from moves to reprice its plans. The Fifa Women’s World Cup also led to greater Optus Sport take-up.

Still, earnings before interest and taxes declined 14 per cent to A$141 million as Optus faced pressure from higher energy costs, as well as foreign-exchange driven operating expenditure.

Singtel’s shares rose 1.7 per cent, or S$0.04, to close at S$2.40 on Thursday.