Singtel sees COVID drag earnings and revenue lower across group

Revenue was down 10% and underlying net profit fell 36%, with COVID-19 and the performance of Optus being pinned for the result.

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Image: Singtel

Singtel has walked away from its first half with a SG$593 million reversal in its net result, improving to SG$466 million in profit from the SG$127 million loss posted in FY2020 for the half year to September 30, but without a SG$1.44 billion hit in its exceptional items column, the group performed worse than last year.

Revenue for Singtel was down 10% to SG$7.4 billion, earnings before interest, tax, depreciation, and amortisation (EBITDA) fell by 19% to SG$1.9 billion, and underlying net profit was down by 36% from SG$1.3 billion to SG$837 million.

"The impact of COVID-19 was felt across the Group with significant reductions in roaming and prepaid revenues and weaker customer spend," CEO Chua Sock Koong said.

"While the challenging operating environment is expected to continue as uncertainties from the pandemic persist, we are seeing encouraging signs of modest recovery across our businesses with sequential quarter revenue growth of 10% in the second quarter, as lockdown measures ease and customer spending returns."

On the plus side for Singtel, it saw revenue upticks during the second quarter for its four business units of Singapore consumer, Australia consumer, enterprise, and digital life.

For the half year, Singapore consumer reported revenue was down 19% to SG$871 million, with EBITDA down 14% to SG$326 million. The telco saw falls of 23% in mobile service revenue, 30% from equipment sales, 2% in pay TV, and 5% in fixed voice. At the same time, its fixed-broadband line item was steady at SG$128 million.

Singtel now has 1.48 million prepaid customers, down 8.4% on last year, and 2.7 million postpaid customers, an increase of 4%. Average revenue per user fell 26% to SG$13 a month for prepaid, and postpaid saw the same percentage point drop to SG$29 a month. Average postpaid data usage each month increased by 12% to 6GB.

For fixed broadband, Singel has 644,000 customers, 377,000 residential pay TV customers, and 206,000 over-the-top streaming customers. The telco has 526,000 households that have either 3 or 4 services made up of fixed broadband, fixed voice, pay TV, and mobile.

One of its rare half-year revenue increases was in the ICT segment of Singtel's enterprise group, which increased 8% to SG$1.5 billion, but it could not fully offset the 12% fall in carriage revenue that left the enterprise group posting revenue of SG$2.86 billion, down 3% year-on-year. Enterprise EBITDA was down 7% to SG$750 million.

"Despite project delays and deferments in the first quarter, ICT revenue grew strongly driven by system infrastructure services, cloud and maintenance projects led by NCS and Australia enterprise, as well as higher data centre revenue," the company said.

After deconsolidating HOOQ at the start of March, the digital life group reported revenue was down 30% to SG$414 million, while its EBITDA loss decreased from a SG$36 million loss to a SG$15 million loss. In the second quarter, digital life posted SG$3 million in positive EBTIDA.

The standout of Singtel's regional associates was Airtel, which decreased its loss from SG$274 million last year to a SG$30 million loss this time out. In India, its profit improved 72% to a SG$92 million loss while its profit in Africa dropped 6% to SG$93 million.

Throughout the rest of the associates, Indonesian telco Telkomsel saw profit fall 18% to SG$467 million, Thailand's AIS and Intouch reported profit falling 16% to SG$166 million and 13% to SG$48 million, respectively, while Filipino telco Globe had its profit drop 10% to SG$182 million.

Singtel's Australian telco Optus saw its revenue drop 9% to AU$4.1 billion, while EBITDA fell by almost a third to AU$997 million. By the time the numbers hit the bottom line, the telco reported a net loss of AU$27 million, compared to AU$235 million in profit posted for the first half a year prior.

During the first half, Singtel had SG$1.18 billion in cash outflow, of which AU$824 was capital expenditure for Optus. This was broken down as AU$520 million for mobile network investment, and AU$304 million for fixed and other infrastructure, while throughout the rest of the group SG$56 million was spent on mobile networks, and SG$257 million on fixed and other core infrastructure.

"Across the group, digitalisation remains central as we move customers to our digital channels and platforms and transform our operating model and processes. We are also making significant investments in 5G and building capabilities, which will serve to create new revenue streams and deliver returns in the mid to long term," Chua added.

Last month, Singtel announced its current head of Singapore consumer business Yuen Kuan Moon would take over as CEO in January when Chua retires.

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