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."

 

SINGAPORE Telecommunications (Singtel) on Thursday posted a net profit of S$466.1 million for the six months ended Sept 30, 2020, reversing from a net loss of S$127 million a year ago.

 

This was mainly due to lower exceptional losses compared with a year ago, when Singtel took on a S$1.93 billion pre-tax share of Bharti Airtel' s S$5.49 billion exceptional provision.

 

Earnings per share stood at 2.86 Singapore cents for the quarter, from a loss per share of 0.78 cent the year before.

 

Operating revenue for the half year was down 10.2 per cent to S$7.42 billion, from S$8.26 billion a year ago. This was due to lower equipment sales, roaming and prepaid mobile revenue.

 

Singtel group chief executive Chua Sock Koong said the impact of Covid-19 was felt across the group, with significant reductions in roaming and prepaid revenues and weaker customer spend.

 

The weak performance was compounded by the structural challenges of the fixed-line business in Australia, with the low margin national broadband network (NBN) resale.

 

However, the information and communications technology segment was the bright spot, with strong growth from NCS and Singtel' s cloud and cybersecurity services in Asia-Pacific as more enterprises adopted and accelerated digitalisation, Ms Chua 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 per cent in the second quarter, as lockdown measures ease and customer spending returns," she added.

 

Meanwhile, pre-tax contributions from regional associates rose 11 per cent for the six months ended Sept 30, as improved performance from Airtel offset the impact of Covid-19 and price pressures in other associates' markets, Singtel said.

 

Singtel' s directors on Wednesday approved an interim dividend of 5.1 Singapore cents per share for the financial year ending March 31, 2021, down from 6.8 cents a year ago. The interim dividend will be paid on Jan 15, 2021, after books closure on Nov 30.

 

Singtel' s board also approved the adoption of a scrip dividend scheme and the application of the scheme to the interim dividend.

 

As for its outlook, Singtel said it will not provide guidance except that dividends from regional associates will be approximately S$1.3 billion and that the group' s capital expenditure, including for 5G networks, will be around S$2.2 billion, comprising A$1.5 billion (S$1.47 billion) for Optus and S$700 million for the rest of the group.