Singtel records $468.8m net profit in H1

Its performance was affected by structural challenges, pandemic, and soft economic conditions.

Singapore Telecommunications’ (Singtel) recorded a post-tax profit of $468.8m in H1, compared to the net loss of $139.2m over the same period last year, according to an SGX filing.

However, its operating revenue declined 10% YoY to $7.43b due to lower equipment sales, roaming and prepaid mobile revenue. Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) also fell 19% YoY to $1.90b, with lower NBN migration revenue, margin pressure from NBN resale in Australia, as well as lower equipment margin and roaming services.

The group’s underlying net profit also dropped 36% primarily due to significant regulatory losses from Airtel’s provision for the adjusted gross revenue matter. Net debt was also at $12.7b, an increase of $200m since the start of the financial year, primarily due to a stronger Australian dollar.

Further, the group's free cash flow declined by 14% to $1.7b, mainly due to higher capital expenditure in Australia.

Singtel’s performance for the first half of the year reflected weakness in its Australia fixed line business amidst structural challenges in the industry, the impact from COVID-19 pandemic, and soft economic conditions.

Despite this, Singtel Group’s CEO Chua Sock Koong noted that the group’s financial position remains healthy. She added that ICT was the bright spot with strong growth from NCS, as well as their cloud and cyber security services in Asia Pacific, as more enterprises adapt to digitalisation.

Improved performance from Airtel has also offset the impact of the pandemic and price pressures as pre-tax contributions from regional associates rose 11% in H1.

In addition, the board has approved an interim dividend at 5.1 cents per share for the half year ending 30 September, totalling $833m. This represents approximately 100% of the group’s underlying net profit for the period. They also approved the adoption of a scrip dividend scheme and the application of this scheme to the interim dividend.

In view of the continued uncertainty in the economic environment, the group said that it will not provide guidance on the outlook except that dividends from the regional associates will be approximately $1.3b and that the group’s capital expenditure including for 5G networks, will be around $2.2b, comprising $1.47b (A$1.5b) for Optus and $700m for the rest of the group.