Singtel lifted in steady first half by operations outside Singapore

Optus and Airtel helped Singtel post steady revenue and earnings, while net profit doubled.
Written by Chris Duckett, Contributor

Singtel Group CEO Yuen Kuan Moon

Singtel has two areas to thank for boosting its profitability while it saw red elsewhere: Optus in Australia, and Airtel in India and Africa.

Overall, operating revenue was up 3% to SG$7.65 billion for the half year to September 30, earnings before interest, tax, depreciation, and amortisation (EBITDA) was reported as SG$1.93 billion, up 1.3%, and net profit doubled to SG$954 million.

A reduced amount of exceptional items against Airtel in India, which has seen a number of items raised in recent years as part of adjusted gross revenue charges from New Delhi, saw the items total recorded as SG$29 million compared to SG$371 million for the first half last year, and translated into the net profit boost.

In pre-tax contributions to Singtel, Airtel recorded a 82% increase across India and South Asia to record SG$376 million as an operational result. It also posted a 34% boost in Africa to have a result of SG$239 million. Once finance costs were taken into account, Airtel overall made a contribution of SG$147 million to Singtel, compared to the SG$13 million pre-tax loss last year.

Along with the other associates in Indonesia, Thailand, and the Philippines having steady results, the associate contribution jumped 21% to SG$1 billion.

In Australia, Optus recorded lower revenue, but had increased profitability thanks to an increase in mobile service revenue and average user spend growing by double digits for prepaid and postpaid mobile users.

Overall, Optus turned its AU$23 million loss for the first half last year into AU$35 million in net profit. Revenue dropped 3.5% to AU$3.9 billion, EBITDA was up 6% to AU$1 billion, and a doubled EBIT to AU$145 million once depreciation and amortisation were taken into account.

Back in Singapore, Singtel's consumer arm saw revenue drop 1.3% to SG$867 million, while EBITDA dropped 5% to SG$298 million. Excluding the Jobs Support Scheme (JSS) credits from the Singaporean government in 2020, Singtel said its EBITDA increased 2% to SG$297 million.

Singtel said its consumer division was hampered by COVID-19 restrictions, global chip shortages, and an 8% reduction in mobile equipment sales. Prepaid customer numbers dropped 9% to 1.35 million and postpaid grew by 2.4% to 2.8 million, while average monthly revenue per user increased 4% for prepaid and fell 1.4% for postpaid, but remained at SG$13 and SG$29, respectively. Data usage for postpaid customers increased by 42% compared to last year, and was reported as 8GB each month.

On the enterprise front, revenue was steady at SG$1.86 billion, EDITDA was down 1.3% to SG$612 million, but slightly up if JSS credits are excluded. Managed services saw revenue increase 8.4% to SG$441 million and cybersecurity grew 15% to SG$105 million for the first half, while data revenue was down 1.7% to SG$711 million, and fixed voice dropped 16% to SG$157 million.

NCS reported revenue growing 4.5% to SG$1.1 billion, and EBITDA fell 21% to SG$147 million as operating expenses increased by 10% as the company added 1,200 staff.

Trustwave saw revenue grow 6% to $149 million as its EBITDA loss contracted 7.4% to $38 million, while Amobee reported an 18% revenue increase for the first half to $374 million and posted $5 million in EBITDA compared to a $4 million EBITDA loss last year.

"This first-half performance underscores our ongoing strategic reset to develop new growth engines in ICT and digital services. The pandemic has provided tailwinds of digitalisation that we are leveraging to rebuild our business during this crisis and we continue executing to this strategy by enhancing NCS' digital capabilities in cloud and data and growing our digital infrastructure to innovate our way through this disruption," Singtel Group CEO Yuen Kuan Moon said.

"We're pleased to see Airtel turn the corner, executing strongly in both India and Africa to deliver a profit turnaround."

Since the ending of its first half on September 30, Singtel has sold a 70% stake of its Australian tower business for AU$1.9 billion, NCS acquired a majority stake in Australian cloud consultancy Eighty20. Singtel also sold off its payment card compliance business Trustwave in a deal worth $80 million

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