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Singtel underlying profit down 36% as COVID-19 still bites

The effects of the coronavirus continued to undermine Singtel's financial performance in the six months to end-September 2020, with a 10% fall in operating revenue and a 36% drop in underlying profit.

The group, which owns operators in Southeast Asia and Australia as well as the subcontinent, also attributed the decrease in revenue and profits in H1 FY21 to weakness in its Australia fixed-line business and soft economic conditions.

It again declined to provide guidance for the full year in view of the continued uncertainty in the economic environment.

Mind the gap: Singtel's profits have taken another hit from the coronavirus steam train.  (Source: Kit Suman on Unsplash)
Mind the gap: Singtel's profits have taken another hit from the coronavirus steam train.
(Source: Kit Suman on Unsplash)

The Singapore-based operator did note that dividends from regional associate companies would be about S$1.3 billion (US$964 million).

Group capex, including for 5G networks, would amount to around S$2.2 billion (US$1.63 billion), comprising A$1.5 billion (US$1.1 billion) for Optus and S$700 million (US$519 million) for the rest of the group.

Singtel, which already reported significant fallout from the pandemic, combined with a one-off Indian spectrum fee and currency devaluation, in FY 2020, said operating revenue reached S$7.43 billion (US$5.5 billion) in H1 FY21 and was adversely affected by lower equipment sales, roaming and prepaid mobile revenue.

EBITDA fell 19% to S$1.90 billion (US$1.4 billion), and underlying net profit, excluding exceptional items, declined 36% to S$837 million (US$620 million).

With lower exceptional losses, the group recorded a net profit of S$466 million (US$345 million) for the first half compared to a net loss in the last corresponding period.

COVID-19 still biting

CEO Chua Sock Koong said the impact of the pandemic was felt across the group, with significant reductions in roaming and prepaid revenues, and weaker customer spend.

"The weak performance was further compounded by the structural challenges of the fixed-line business in Australia, with the low margin NBN resale," she said.

"However, ICT was the bright spot with strong growth from NCS [Singtel's ICT subsidiary] and our cloud and cybersecurity services in Asia Pacific as more enterprises adopted and accelerated digitalization."


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While noting that the "challenging operating environment" is expected to continue as uncertainties from the pandemic persist, Chua said the group is seeing "encouraging signs of modest recovery across our businesses with sequential quarter revenue growth of 10% in the second quarter, as lockdown measures ease and customer spending returns."

Singtel also provided an update on 5G, noting that the rollout of networks across Singapore and Australia has been progressing steadily. In Australia, Optus has launched over 920 5G sites, for example.

Chua is retiring on January 1 after 31 years with the operator. Yuen Kuan Moon, the head of consumer business and chief digital officer, has been named successor.

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— Anne Morris, contributing editor, special to Light Reading

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