Featured Story
Intel and telcos left in virtual RAN limbo by rise of AI RAN
A multitude of general-purpose and specialist silicon options now confronts the world's 5G community, while Intel's future in telecom remains uncertain.
Singapore Telelcommunications announces net profit of S$854M, up 188% from S$296M in the year-ago quarter; mobile revenue was S$207M
February 6, 2004
SINGAPORE -- Singapore Telecommunications Limited (SingTel) today announced its unaudited results for the third quarter and nine months ended 31 December 2003. Unless otherwise indicated, comparisons in this news release are against the quarter ended 31 December 2002.
Group
The SingTel Group delivered yet another set of robust results for the quarter ended 31 December 2003, with extremely strong growth in both revenues and profits. Net profit after tax rose 188 per cent to S$854 million. Excluding goodwill, net profit was S$1.02 billion, an increase of 121 per cent.
Revenue for the Group increased by 16 per cent to S$3.02 billion, crossing the S$3 billion mark for the first time. Operational EBITDA rose 18 per cent to S$1.11 billion, with Optus contributing 54 per cent of it.
The Group’s operating margin expanded further to 37 per cent, with both the Singapore and Australian operations enjoying better margins. Free cash flow generation continued to be strong at S$652 million.
Group EBITDA, aided by strong performances by the regional mobile associates, grew 32 per cent (excluding the impact of the associates’ exceptional items) to S$1.62 billion.
Overseas operations contributed 68 per cent of the Group’s proportionate EBITDA. In terms of revenue, 77 per cent was from outside Singapore.
For this quarter, the Group recorded a S$223 million foreign exchange gain on Australian Dollar denominated loans to Optus.
Group net profit, pre-goodwill, for the nine months ended 31 December 2003 rose 92 per cent to S$3.01 billion. Post-goodwill, it more than doubled to S$2.52 billion. Revenue for the nine months increased 17 per cent to S$8.83 billion despite the divestment of the postal and directories businesses.
Mr Lee Hsien Yang, SingTel President & CEO, said: “I am delighted with the excellent progress of the Group’s performance. SingTel is well on track to meet its targets for the year with strong growth in both earnings and cash flows.
“The careful formulation and successful execution of our strategy over the years have enabled SingTel to transform itself into the blue chip growth stock it is today. We are confident of delivering double digit earnings growth for the medium term, and continuing to enhance value for our shareholders.”
SingTel
In Singapore, SingTel improved its operating margin to 52 per cent for the quarter and generated free cash flow of S$355 million despite difficult market conditions.
Excluding revenues from the postal and directories businesses, SingTel’s revenue fell 8.4 per cent to S$973 million. This was due to weaker than expected revenues from IT and engineering services and the continued weakness in international telephone revenue. Revenue from data and mobile services however remained stable on a sequential basis.
Data and Internet revenue for this quarter was S$279 million, comparable to the preceding three quarters, although a 3.1 per cent decline year-on-year. Demand for broadband services remained robust, with the number of ADSL lines growing 88 per cent to 242,000. Broadband revenue more than doubled to S$61 million for the quarter.
There were improvements in mobile communications. Monthly postpaid churn fell to a record low of 1.1 per cent despite the introduction of free mobile number retention in August 2003. Acquisition cost per subscriber fell sharply to S$141 in the quarter from S$194 a year ago.
Mobile revenue was S$207 million for the quarter, an increase of 1.0 per cent year-on-year. Both prepaid and postpaid ARPUs were stable with data services contributing 17 per cent of mobile revenue, up from 13 per cent a year ago. The number of mobile subscribers grew slightly during the quarter to 1.53 million.
In the international telephone market, SingTel retained a significant share of 77 per cent. The number of outgoing international minutes rose 2.6 per cent to 233 million for the quarter. However, lower average collection rates and a drop in inpayments resulted in revenue from this segment decreasing 12 per cent to S$180 million. This was however smaller than the 16 per cent decline recorded in the preceding quarter.
Revenue from IT and engineering services contracted 28 per cent during the quarter to S$113 million. This was due to a variety of factors – weakened IT demand in Singapore, a slower than expected post-Sars recovery in China and an unusually strong third quarter last year.
SingTel continued to manage its costs very carefully. Excluding SingPost and Yellow Pages, operating expenses fell a hefty 12 per cent, greater than the decline in revenue, to S$470 million.
Gross staff cost fell 3.5 per cent due mainly to the reduction in the employers’ CPF rate from 16 to 13 per cent and lower headcount. As at 31 December 2003, SingTel and its subsidiaries (excluding Optus) had 10,324 employees, a decrease of 3.2 per cent compared to last year.
Traffic expenses (excluding SingPost) fell 3.5 per cent year-on-year. Excluding a one-time credit in the last corresponding quarter, traffic expenses would have declined by 15 per cent reflecting lower settlement rates.
Selling and administrative expenses dropped 17 per cent (excluding payments to SingPost and Yellow Pages) as a result of lower mobile acquisition and retention costs and lower licence fees.
SingTel’s cash flow during the quarter was boosted by dividends received from SingPost and PT Bukaka of S$90 million and S$22 million respectively.
With the completion of the C2C cable network, SingTel’s cash capex during the quarter fell sharply to S$78 million, and this brought the cash capex-to-operating revenue ratio down to 8 per cent from 11 per cent a year ago. SingTel expects its capex to revenue ratio for the full financial year to be lower than the previous guidance given of low to mid teens.
SingTel Optus
In Australia, Optus’ net profit after tax for the third quarter was A$126 million compared to A$22 million last year. Net profit for the first nine months of the year was A$316 million.
Revenue for the quarter was up 14 per cent to A$1.66 billion (S$2.05 billion). In Singapore Dollar terms, the growth was stronger at 43 per cent. Operational EBITDA grew 36 per cent to A$488 million and margins expanded to 29 per cent, up five percentage points.
“Optus is tracking well in terms of its full year guidance,” Optus Chief Executive, Mr Chris Anderson said. “There were revenue growth, margin expansion and increases in market share for all divisions.”
“Driven by stronger operating performance, free cash flow continued to improve. Free cash flow for the quarter was A$210 million, up 47 per cent compared to A$143 million for the same period last year,” he said.
For the year to date, free cash flow was A$697 million, an improvement of 115 per cent on the corresponding period last year.
Cash capital expenditure for the quarter was A$280 million, an increase of 13 per cent on the same quarter last year. This quarter included a significant payment for Southern Cross cable capacity of A$107 million.
On a year to date basis, capex reached A$634 million or 13 per cent of revenues excluding the C1 contract, which compares favourably to the ratio of 16 per cent last year.
Optus Mobile continues to deliver profitable growth with total revenues for the quarter up 18 per cent to A$915 million and mobile service revenues (excluding equipment) up 17 per cent.
Mobile data revenues grew by more than 40 per cent with the number of SMS messages per subscriber increasing by 27 per cent compared to the same quarter last year. Data now represents 14 per cent of service revenues.
Mobile customer numbers increased 18 per cent to 5.37 million while postpaid ARPU was up 7.6 per cent for the quarter.
Mobile’s operational EBITDA margin reached 37 per cent for the quarter. This reflects a continuing focus on high value customers, as well as a 7.9 per cent reduction in unit subscriber acquisition and retention costs compared to the same quarter last year.
Overall revenue for Optus Business and Wholesale rose 5.7 per cent to A$372 million this quarter as both divisions announced important customer wins. The combined EBITDA margin improved five percentage points to 26 per cent driving EBITDA growth of over 30 per cent compared to the same quarter last year.
Optus Business continues to make gains in the competitive corporate market with revenue growth of 4.8 per cent compared to the same quarter last year. This result was driven by healthy growth in corporate voice revenues.
The Optus satellite business is performing strongly and third quarter revenues increased by 14 per cent. Optus is the leading provider of satellite television broadcasting in Australia and New Zealand with more than one million dishes pointing at Optus satellites.
Optus Wholesale reported another strong 7.9 per cent increase in revenue compared to the same quarter last year.
Optus Consumer and Multimedia reported another quarter of cash flow growth – its fourth consecutive quarter of positive cash flow. Revenue growth remained strong, up 14 per cent for the quarter while its EBITDA margin expanded to 14 per cent, a 10 percentage point improvement on the same quarter last year.
HFC[1] revenues grew by 8.5 per cent, reflecting ARPU increases and a higher bundling rate – with local telephony bundling at 63 per cent compared to 59 per cent last year.
Internet customer numbers increased by 18 per cent on the same quarter last year to 647,000, with broadband Internet customer numbers up 55 per cent to 132,000.
Optus’ off-net telephony business continues to grow with revenue increasing by 17 per cent to A$184 million and bundling rates growing by five percentage points to 38 per cent.
The division generated free cash flow of A$32 million in the quarter taking free cash flow for the nine months to A$71 million – an improvement of A$205 million over the same period last year. The EBITDA improvement and a decline in the capex to revenue ratio contributed to this strong position.
Associated companies
The Group’s share of pre-tax profits from the ordinary operations of its associates increased 2.1 times to S$424 million.
Share of ordinary earnings from the regional mobile business – AIS, Bharti, Globe and Telkomsel – rose 68 per cent to S$238 million as the number of mobile subscribers jumped 43 per cent to 37.2 million. Including Optus and SingTel, the Group’s regional mobile base as at 31 December 2003 was 44.1 million, a year on year gain of 37 per cent.
Telkomsel increased its contribution to the Group’s pre-tax profit by 52 per cent to S$128 million. Profit growth was spurred on by a strong operating performance as its mobile subscriber base went up by over 60 per cent to 9.6 million.
SingTel’s share of ordinary earnings from AIS rose 31 per cent to S$65 million, the result of strong subscriber growth and effective cost management. Contributions (pre-exceptionals) from Bharti and Globe amounted to S$25 million and S$21 million respectively.
There were also positive earnings contributions from Belgacom, SingPost and PT Bukaka including an additional quarter of results from Belgacom following an alignment of its financial period with the Group’s for consolidation purposes.
Exceptional items from the associates were mainly related to the transfer of Belgacom’s pension fund to the Belgian State, as part of Belgacom’s preparations for its initial public offering.
For the nine months to 31 December 2003, SingTel received from its associates ordinary dividends amounting to S$328 million, a 152 per cent increase compared to the same period last year. There was also a special dividend of S$200 million from SingPost.
Financial position
The Group’s free cash flow[2] for the quarter, at S$652 million, was higher by 25 per cent compared to a year ago. This reflected improved cash flow at Optus.
Net debt was higher at S$8.49 billion due to the additional investment in Globe, settlement of the bond buyback executed at the end of September 2003 and foreign exchange rate movements.
Net debt gearing was 32 per cent. Net debt was 1.5 times EBITDA while EBITDA was 14 times of net interest expense. These credit ratios are in line with commitments made to bond investors.
The Group announced at the last results that it has increased its dividend payout ratio to between 40 and 50 per cent of net profit after tax, excluding goodwill and exceptional items. It also said that it will consider special dividends, or alternative capital management strategies, if exceptional items result in significant cash inflows.
SingaporeTelecommunications Ltd. (SingTel)
You May Also Like