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Singtel continues downward trend across 2021 fiscal year


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Image: Singtel

Singaporean telco Singtel has continued to see its balance sheet contract as it reported decreases across the board for the full year to the end of March.

Revenue for the telco was down 5% from SG$16.5 billion to SG$15.6 billion, earnings before interest, taxation, depreciation, and amortisation (EBITDA) dropped by 16% to SG$3.8 billion, and net profit halved to SG$554 million. All of these numbers were down in the last financial year, dramatically so in some cases. For net profit, the telco reported SG$3.1 billion in fiscal 2019, SG$2.5 billion higher than this year’s number.

“This year’s results are disappointing given unprecedented headwinds from COVID-19 and ongoing structural challenges,” CEO Yuen Kuan Moon said.

“NCS and our data centre services proved to be bright spots, showing strong growth as enterprises rushed to digitalise and transform their businesses. We will be capitalising on this mass digitalisation with plans for a strategic reset to drive recovery and growth.”

One of the few positive areas for Singtel was the contribution from its regional associates, up 4% to SG$1.7 billion, however all the gains were posted by Bharti Airtel which reversed last year’s SG$403 million loss into profit of SG$23 million. Telkomsel was down 22% to SG$915 million, AIS dropped 8.5% to SG$334 million, Intouch saw its contribution fall 7.4% to SG$94 million, and Globe experienced a 15.6% decline to SG$346 million.

Singtel’s consumer business in Singapore reported a revenue drop of 14% to SG$1.8 billion, and said during the second half it had seen reduced roaming, prepaid mobile, and voice revenue, while on the other hand, it had higher handset sales as consumers upgraded to 5G devices. EBTIDA was down 17% to SG$627 million.

The enterprise segment reported revenue dropping 1.4% to SG$5.94 billion and EBITDA falling 5% to SG$1.51 billion. Managed services grew 9.7% to SG$1.95 billion, revenue for business application services jumped 5% to SG$592 million, and communications engineering saw sales increase 5% to SG$153 million. Headed in the other direction were all carriage services — mobile, equipment sales, data, and fixed voice — which collectively were down 10% to SG$2.68 billion. Cybersecurity was down very slightly to SG$564 million.

Broken out by unit, NCS saw revenue increase 6.2% to SG$2.3 billion and EBITDA grow 13% to SG$330 million, while Trustwave saw revenue steady at SG$393 million and EBITDA improve 92% to a SG$61 million loss.

Along with Amobee, which posted revenue down 17.6% to SG$664 million and EBITDA shrink 85% to SG$4 million, Trustwave is now facing a strategic review.

“The exceptional items in the second half year included non-cash impairment charges of SG$589 million ($438 million) and SG$336 million for the intangible assets and goodwill of Amobee and Global Cyber Security Business respectively,” the telco said.

“The ongoing industry and operational challenges and COVID-19 pandemic have resulted in underperformance of their business plans and impacted the recoverable values of these businesses. Singtel has commenced a strategic review to consider options for these businesses in order to sharpen the group’s focus and ensure that these assets are positioned for growth.”

As well as the review, NCS will be taking on Trustwave’s technology services, as the NCS is slated to become a “key growth driver”.

“With its public-sector focus, NCS has been a consistent revenue growth engine for the Group over the years,” Yuen said.

“It makes a lot of sense to develop this growth engine by casting its net further afield into the enterprise sector and markets outside Singapore where we have presence and synergies. There will be no letting up in the e-government side of the business, but this is a major turning point for NCS.”

As for Singtel’s Australian arm, Optus walked away from the full year to March 31 a little battered and bruised. The company saw declines across the board, and thanks to a number of exceptional items, recorded a AU$208 million net loss for the year, a drop of AU$610 million.

“With the completion of the NBN rollout in Australia and the subsequent migration of customers, Optus has undertaken a comprehensive review of its network assets and recorded non-cash impairment charges of AU$197 million due mainly to its legacy fixed access networks that will no longer be used,” the company said.

Optus added it also had a AU$98 million item against its payroll review that saw thousands of its current and former workers potentially having underpaid superannuation.

Optus is set to spend AU$1.5 billion in capital expenditure over its next financial year, while the rest of the Singtel group will spend SG$800 million.

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