Singtel H2 net profit rises to S$994.5m; proposes final dividend of S$0.048

SINGTEL : Z74 0% on Friday (May 27) reported S$994.5 million in net profit for the second half ended March 2022, up more than 10 times from S$87.6 million in H2 FY2021.

The bottomline growth came despite lower operating revenue, with profits coming in higher year on year as the group’s exceptional items turned positive, from a net exceptional loss booked the previous year.*

Operating revenue for H2 FY2022 fell 6.5 per cent to S$7.69 billion from S$8.22 billion the previous year. This was mainly due to lower sales of equipment as well as a decrease in revenue from its mobile, data and internet, fixed voice and pay television segments.

Exceptional items for the half-year period turned positive, with a net exceptional gain of S$295.5 million compared to a S$1.14 billion net exceptional loss the previous year, as the group recognised a net gain of disposal from its sale of 70 per cent of shares in Australia Tower Network.

Besides the one-off boost from higher exceptional gains, overall exceptional losses for the half-year also significantly narrowed to S$521.4 million from S$1.25 billion in H2 FY2021 as a result of lower impairments.

For the full year ended March 2022, net profit stood at S$1.95 billion, about 2 and a half times up from FY2021 net profit of S$553.7 million due to a net exceptional gain compared to a net exceptional loss last year.

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Operating revenue fell 2 per cent to S$15.34 billion to reflect lower NBN (National Broadband Network) migration revenue, as well as the continued impact of Covid-19 and challenges in Singtel’s carriage business.

Singtel said operating revenue was stable excluding NBN migration revenue and Jobs Support Scheme (JSS) credits, as it saw strong growth in its mobile service segment in Australia.

Underlying operating revenue, excluding the NBN and JSS impact, was down by 5.5 per cent in the second half and 0.4 per cent for the full year.

Singtel chief executive Yuen Kuan Moon told a press briefing that the second-half performance was due to Covid-19 lockdowns in Australia and the impact of supply-chain shortages on handset volumes.

“Some of the equipment revenue normally gives us lower margins, and it’s mitigated by service revenue improvement as well,” he added.

Singapore consumer revenue fell by 6 per cent year on year in the second half, to S$897 million, even as mobile service revenue picked up on a higher number of postpaid subscribers and a slight uptick in postpaid mobile average revenue per user (ARPU).

Australia consumer revenue was down 11.3 per cent to S$3.27 billion, and group enterprise turnover shed 2.5 per cent to S$1.87 billion. ICT services arm NCS was the only segment to post revenue growth, as turnover rose by 2.3 per cent to S$1.25 billion.

Underlying net profit improved by 4.9 per cent for the half-year to S$941 million and by 11 per cent for the full year to S$1.92 billion, mainly lifted by its subsidiary Bharti Airtel’s “resilient turnaround”. That’s as post-tax contributions from regional telco associates grew 19.1 per cent in the second half to S$749 million. Bharti’s return to profitability offset revenue declines at Telkomsel, AIS, Intouch and Globe.

Still, Yuen called Singtel “cautiously optimistic that the Indian market will continue to grow”, on the back of changes in the regulatory environment and market competition, while “we do see some positive momentum” in the other associates’ operating markets as economic conditions pick up post-pandemic.

Singtel’s board has proposed a final dividend of 4.8 cents per share. Together with its interim dividend of 4.5 cents per share, this brings the group’s ordinary dividends for FY2022 to 9.3 cents per share, up from 7.5 cents per share in the previous year, but lower than 12.25 cents per share in FY2020 and 17.5 cents in FY2019.

In its outlook, Singtel said it expects to benefit from the recovery in international travel as borders continue to reopen.

It estimates dividends from regional associates to be approximately S$1.1 billion, and its capital expenditure to be around S$2.6 billion - comprising A$1.7 billion (S$1.66 billion) for Optus and S$0.9 billion for the rest of the group.

“This reflects the group’s multi-year growth investments in 5G networks, data centres and satellites, as well as digital transformation initiatives to enhance customer experience and efficiency,” said Singtel of its capital spending.

The counter ended Thursday up S$0.09 or 3.4 per cent at S$2.73, after spiking as much as 4.5 per cent to hit an intra-day high of S$2.76.

Its share price movement came after the Economic Times reported Singtel had initiated talks with Bharti Airtel chairman Sunil Mittal, to potentially sell a “small” part of its holding in the Indian telco to the Mittal family.

Addressing the issue in a separate bourse filing on Friday morning, Singtel clarified that the group had been strategic investors in Airtel “for decades”, and emphasised that it remains a core investment in the group’s international portfolio.

“As for the media hearsay, we do not comment on market speculation and abide by market disclosure rules pertaining to material transactions,” said Singtel in its statement.

The group added that it has taken “proactive steps to illuminate the value of (its) portfolio of strategic investments” in its bid to “narrow the significant valuation gap which Singtel shares suffer from”, per its ongoing strategic reset.

*Amendment note: This article has been edited for clarity.