Singapore Telecommunications (Singtel) on June 27 released its FY2023 ended March annual and sustainability report. Titled Our Purpose-Driven Journey, the report’s theme reflects the sustained progress that the group has achieved in the second year of its strategic reset to accelerate growth in the 5G era, driven by its purpose to empower every generation.
Singtel has made strides in its strategic priorities as it transforms to become a more relevant and socially impactful group. It built on its 5G leadership, differentiated product offerings and roaming recovery to reinvigorate and drive a 15% Ebit increase in its core businesses. Its growth engines – NCS, data centre and digital banking businesses – have grown in scale.
As a result of active capital management efforts, Singtel has generated over $5 billion of cash from free cash flow and capital recycled for a second successive year. This includes more than $2.8 billion unlocked mainly from divesting a 3.3% stake in regional associate Airtel, strengthening Singtel’s balance sheet and allowing it to deliver better returns to shareholders.
Earnings were up 14% to $2.23 billion, compared to $1.95 billion a year ago, thanks to the strong performance of its core businesses, underpinned by robust mobile growth and price increases as international travel and roaming recovered, and 5G adoption and demand for ICT services rose.
Excluding adverse currency effects and the absence of revenue from network migration in Australia and digital marketing unit Amobee which has been sold, operating revenue rose 5% y-o-y to $14.62 billion, largely driven by mobile and ICT services growth.
In their joint message to shareholders, Singtel chairman Lee Theng Kiat and Group CEO Yuen Kuan Moon says: “Our business has come back strong, while we pivoted assertively into new areas of growth, as economies continue to undergo rapid digitalisation.”
See also: Singtel denies report it is 'exploring options' over Australia unit
They added: “Given the 5G leadership that we’ve established, and our ongoing efforts to restructure and drive new growth, we have every confidence the group is well-placed to do bigger and better in the year ahead.”
Meanwhile, group CFO Arthur Lang outlined Singtel’s intention to maximise corporate value and increase capital efficiency. A low double-digit return on invested capital (ROIC) has been set for the group in the mid-term, from the current ROIC of 8.3%.
The group will continue focusing on driving profitability in its core businesses, including Singapore and Australia operations, as well as improving the rate of returns of growth engines such as NCS and the regional data centre business and establishing capital partnerships to support growth and scale them up.
See also: Singtel secures $535 mil five-year green loan, its first
Renumeration disclosure
The higher remuneration for the Singtel Board in FY2023 was due to the revision to the remuneration framework, an increase in the number of meetings, a greater number of directors, the establishment of a new board committee, and the chairman’s acceptance of fees for FY2023.
The chairman had declined to accept any fees for FY2021 and FY2022. Under the revised remuneration framework, the all-in chairman’s fees is $1.15 million. For FY2023, he requested to receive, and was paid, a lower amount of $0.96 million. He has also requested to be paid this lower amount of $0.96 million for FY2024.
Meanwhile, group CEO Yuen saw a drop in his renumeration in FY2023, despite revenue and earnings growth during the period. His total cash and benefits for FY2023 came up to $3.38 million, a decrease from $3.44 million in FY2022.
In a June 22 report by UOB Kay Hian, the research house said that Singtel’s is amongst one of the companies that generated the most “value” out of its CEO, as compared to net profit. This was based of FY2022 numbers.
In comparison to telco peer StarHub CC3 , Yuen's renumeration is comparable to StarHub's CEO Nikhil Eapen. StarHub, which only has presence in Singapore and Malaysia, saw its CEO draw a salary of about $3.44 million in its FY2022 ended December 2022. But according to its annual report, Eapen has only received $2.5 million of that total salary. To recap, StarHub's FY2022 saw earnings decline by 58.3% y-o-y to $62.2 million, while total revenue stood at $2.3 billion, representing a 13.9% y-o-y growth.
The renumerations for the key management however were not specifically disclosed, but were disclosed in a band. Neither were the names of the individual key managements were disclosed to be under which band. The key management are: Aileen Tan, Anna Yip, Arthur Lang, Bill Chang, Kelly Bayer Rosmarin, Lim Cheng Cheng, Mark Chong, Ng Kuo Pin and William Woo. Of which, one is under the band of $2.25 million to $2.5 million; one under receiving between $1.75 million to $2.0 million; two with $1.5 million to $1.75 million; three with $1.25 million to $1.5 million; and two receiving between $1.0 million and $1.25 million.
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Sustainability efforts
The group says that it is committed to safeguarding the environment for future generations and bringing about positive change for its people and communities in the markets it operates in. As part of its efforts to accelerate climate action, Singtel has brought forward its net-zero goal by five years, from 2050 to 2045, one of a handful of progressive corporates to make this commitment.
It has reduced its Scope 1 and 2 absolute emissions by 11% and has updated its Science Based Targets initiative (SBTi) environmental targets to ensure alignment with the 1.5°C climate goal as set out in the Paris Agreement. These targets are pending validation by SBTi and will be disclosed when approved.
In its annual and sustainability report, the group has also highlighted its efforts to empower its people, support the community, and create sustainable value for stakeholders. As part of its commitment to good governance and communications with stakeholders, its annual report has incorporated additional information on its sustainability targets and its headway against these goals.
Muted share price
While salaries may be lower for the chairman and group CEO, Singtel’s share price has remained rather muted. Shares in Singtel closed at $2.48 on June 26, while the stock was trading at $2.60 the same period a year ago.
Despite the earnings growth, the group’s associates also experiencing earnings growth and a 60% increase in dividend payout in FY2023, share price has stayed rather consistent.
Analysts have “buy” calls on the stock and are generally upbeat on its outlook.
