Singtel’s net profit for FY2022 for the 12 months to March 31 grew two and a half times to $1.95 billion primarily due to a net exceptional gain from the group’s divestment of its 70% equity stake in Australia Tower Network compared to a net exceptional loss last year.
Underlying net profit improved 11% to $1.92 billion, mainly lifted by Airtel’s resilient turnaround. Operating revenue fell 2% to $15.34 billion while Ebitda was also down 2% to $3.77 billion, reflecting lower NBN migration revenue, the continued impact of Covid and challenges in the carriage business.
Excluding NBN migration revenue and Jobs Support Scheme (JSS) credits, operating revenue was stable, with Ebitda and Ebit growing 8% and 33% respectively, driven by growth in mobile service in Australia.
The regional associates’ pre-tax profit contribution grew 21% to $2.07 billion. This was driven by Airtel’s double-digit increases in operating revenue and Ebitda as it staged a sturdy recovery in India and saw sustained growth in its African operations.
While the regional associates were impacted by Covid-related movement restrictions, Globe’s performance was further affected by Typhoon Odette in the Philippines as well as an increase in depreciation and finance charges. AIS also faced higher depreciation and amortisation charges from network and spectrum investments.
In May 2021, digital marketing arm Amobee was placed under strategic review. An exceptional non-cash impairment charge of $310 million was made in March 2022 and Amobee is now classified as a subsidiary held for sale. Singtel’s net debt fell to $10.1 billion, from $12.4 billion a year ago, as cash and bank balances were boosted by cash inflows from divestments.
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Free cash flow for the year fell 9% to $3.08 billion on lower operating cash flow attributable to working capital movements and higher tax payments, partially offset by higher dividends from associates.
Singtel plans to pay a final dividend of 4.8 cents per share. Together with the interim dividend of 4.5 cents per share, the ordinary dividends for FY2022 would be 9.3 cents per share, totalling approximately $1.5 billion. This represents a payout ratio of 80% of underlying net profit and a growth of 24% y-o-y.
In a separate announcement, Singtel refutes a report from the Economic Times of India that it is planning to sell up a US$2 billion stake in Bharti Airtel.
Singtel dismisses the "media hearsay", adding: "We would like to make patently clear that we have been strategic investors in Airtel for decades and it remains a core investment in our international portfolio."
"As per our current strategic reset which we shared with the market last May, one of our focus areas is to narrow the significant valuation gap which Singtel shares suffer from as it does not reflect the value of the holdings in our associates," says Singtel.
The telco adds that it has taken "proactive" steps to "illuminate" the value of its various investments. Recent examples include the divestment of Singtel’s 70% stake in ATN which owns Optus Towers; working with Gulf in Thailand to enhance value in our regional associate AIS; and a partial divestment of 1.6% in Airtel Africa via a market placement to raise $150 million as part of its capital recycling strategy.
