SINGAPORE (May 28): Singapore Telecommunications (Singtel)’s earnings or net profit fell 26% to $574 million for the 4Q20 ended March, from $773 million a year ago, on the back of a net exceptional charge of $302 million from Bharti Airtel’s provision for the spectrum charge.
This brings its full-year earnings to $1.08 billion, a 65% drop y-o-y due to Airtel’s exceptional charges of $1.80 billion on for regulatory costs.
“This has been a challenging year, given structural shifts in the industry, already soft economic conditions, adverse regulatory outcomes in India and the onset of COVID-19 in the fourth quarter. Travel and movement restrictions have led to significant reductions in roaming and prepaid revenues and slowing economic growth has impacted business spend,” says Chua Sock Koong, group CEO of Singtel.
“Despite these challenges, we remained resilient and gained market share in mobile and fixed services in Singapore. Our enterprise business also defended its market leadership in Singapore and the Asia Pacific, particularly in cyber and cloud, while NCS closed the year with a strong order book,” she adds.
Underlying net profit for FY20 declined 13% to $2.46 billion mainly from the Group’s share of Airtel’s exceptional loss of $1.80 billion due mainly to provisions made for regulatory costs. Other exceptional items of the Group included gains on dilution of Singtel’s effective equity shareholding in Airtel partly offset by impairment of Amobee’s goodwill and write-off of investment in HOOQ.
4Q20 operating revenue fell 10% y-o-y to $3.90 billion from last year’s $4.34 billion due largely to the 6% depreciation in the Australian dollar. Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter declined 12% y-o-y to $1.03 billion.
Operating revenue for the year slid 4.8% y-o-y to $16.54 billion on the back of lower mobile service revenue and equipment sales, aggravated by the onset of COVID-19, as well as the weaker Australian dollar. EBITDA for the year dipped 3.2% to $4.54 billion on the weaker performance in Australia, low margins on equipment sales, and National Broadband Network (NBN) resale in Australia.
The Singapore Consumer segment recorded market share gains in mobile and fixed lines for 4Q20. Equipment sales fell by 35% on supply disruptions for certain premium handsets and weaker consumer spend in the quarter. Mobile service revenue fell 12% in 4Q20 mainly due to lower roaming and prepaid services arising from travel restrictions, fewer tourists and foreign workers, as well as continued voice erosion.
4Q20 operating revenue for the Australia Consumer segment declined 8.3% on lower mobile service revenue due to a higher mix of SIM-only customers, continuing data price competition, and COVID-19. Equipment sales in Australia fell by 22% from lower volumes from unbundling of mobile devices from service contracts, delivery disruptions, and weaker consumer sentiment in light of natural disasters and Covid-19.
Group Enterprise revenue was down 4.5% for the quarter due to the decline in mobile service revenue from roaming, and equipment sales. ICT revenue grew 3.8% on contributions from NCS, which closed the year with an order book of $3.2 billion.
Cyber security revenue was up 1.9% for the quarter with contributions from Asia and the US, and offset by weaker performance in Australia.
Group Digital Life’s revenue for 4Q20 decreased 15% on falling contributions from digital marketing arm Amobee, due mainly to one-off revenue from the delivery of a contract milestone for iTV, UK’s biggest commercial TV broadcaster, last year.
Earnings per share for the quarter came in at 3.52 cents, and at 6.58 cents for the year.
As at March 31, 2020, cash and cash equivalents for the group stood at $999.6 million.
The board is recommending a final dividend per share of 5.45 cents, compared to 10.7 cents the year before, to preserve financial headroom to cope with uncertainties in the current COVID-19 operating environment and the capacity to invest in 5G. Singtel won one of two 5G licences on April 29.
See also: Analysts mixed on telco prospects after 5G licences are awarded
This brings the total ordinary dividend per share for the year to 12.25 cents and represents a payout of approximately $2.0 billion.
Looking ahead, the Group says it is focused on investing for “longer term growth” and ensuring that it has the capacity and financial headroom to weather the industry and economic headwinds. It adds that it will continue its multi-year 5G capital expenditure programme to strengthen its network and market leadership, and to create new revenue opportunities.
“It will be some months before the full impact of COVID-19 on our business can be ascertained. However, the lockdown has accelerated unprecedented digital adoption. We have witnessed the accelerated take-up of our digital services by both consumers and enterprises trying to meet business demands under the current circumstances,” says Chua.
“In recent years, digitalisation has been central to our transformation strategy, moving Consumer and Enterprise customers to digital channels and platforms, to enable more seamless customer interactions and greater efficiencies. These efforts have not only allowed us to respond swiftly to the current crisis, we also see ourselves emerging from COVID-19 better positioned with our core business,” she concludes.
Singtel shares closed flat at $2.62 on Wednesday prior to the announcement.
