SINGTEL management has not yet pinned down a turnaround trajectory, despite calling itself " encouraged" by the telco' s latest quarter-on-quarter growth.

 

Describing the pick-up as " still quite tentative" , outgoing chief executive Chua Sock Koong said: " Fingers crossed, if you don' t see a significant deterioration in sentiment for whatever reason, we would expect the revenue recovery to continue whether we would exceed the pre-pandemic levels is still to be seen."

 

That comes as mainboard-listed Singtel turned in a 36.2 per cent year-on-year decline in underlying net profit for the six months to Sept 30, on a 10.2 per cent drop in revenue.

 

When asked about any future topline uplift from the launch of 5G services, Ms Chua told an earnings briefing on Thursday that " we do expect higher revenues coming from 5G customers, but connectivity alone is not the 5G game" .

 

She called for new revenue sources from applications and platforms that " traditionally have not been accruing to the telcos" , which she said " network providers should, and must, participate (in) to make sure that we earn a return on our 5G investments" .

 

Singtel recorded turnover of S$7.42 billion for the half year, down from S$8.26 billion in the year prior and S$8.40 billion in the six months to Sept 30, 2018. Operating revenue was down year on year across all major business segments, even though group enterprise notched a milder dip of 2.5 per cent.

 

" The ongoing erosion in core carriage - that has not changed," Ms Chua, who is set to hand the reins to group consumer chief Yuen Kuan Moon on Jan 1, acknowledged. " But, as we have described, business sentiments have been weak and that has definitely affected discretionary spending."

 

Still, the quarter-on-quarter trend also showed broad-based recovery, including a return to profitability by group digital life, which had been loss-making in the first three months. Singtel' s digital life division is anchored by digital marketing business Amobee, where contributions had suffered from lower spend by brands and advertisers.

 

Citing the second-quarter improvement from the first-quarter April-to-June trough, Ms Chua said: " We' ve shown you what the sequential revenue recovery looks like, and that' s pretty encouraging."

 

She named Singtel' s Australian business, Optus, as " the biggest drag" on the back of structural headwinds from fixed-line migration to " a much lower-margin NBN resale" from the shift Down Under to a nationwide broadband network.

 

But Ms Chua noted that increased digitalisation in both the private and public sector has been a boon to the infocomm technology (ICT) business, as well as cybersecurity services. ICT made up more than half of group enterprise revenue for the half year, and notched a 7.8 per cent rise in turnover, beating the 12.1 per cent fall in carriage contributions.

 

Meanwhile, Singtel - which declared an interim payout that makes up almost all of half-year underlying earnings - also said in its outlook statement that full-year dividends are not expected to exceed underlying net profit.

 

It pledged to review its dividend policy at the end of the financial year, " when there is more clarity on the impact of the Covid-19 pandemic on the group' s businesses" .

 

In laying out the dividend guidance, the management reiterated a commitment to the group' s investment-grade credit ratings. S& P and Fitch both downgraded their long-term issuer ratings on Singtel in March to " A" , from A+ before, while Moody' s rates it A1.

 

Said Citi analyst Arthur Pineda in a flash note: " While the H1 2021 profits were soft, the operating trends do show promise and the dividend clarity should be taken positively."