NetLink Trust sale boosts Singtel's profit to $2.89b

Turnover at the consumer operations here, which makes up about one-fifth of Singtel's overall consumer business revenue, dipped 2.1 per cent in the quarter to $564 million.
Turnover at the consumer operations here, which makes up about one-fifth of Singtel's overall consumer business revenue, dipped 2.1 per cent in the quarter to $564 million.PHOTO: REUTERS

Investors to enjoy $500m bonus payout due to record Q2 gains

Investors are in line for a $500 million bonus payout nicely timed for Christmas, thanks to the record quarterly profit racked up by Singtel after it divested its majority stake in NetLink Trust.

The divestment in July sent earnings rocketing to $2.89 billion, a 197.1 per cent jump on the $972 million recorded for the second quarter last year and the highest for any three-month period.

Shareholders can look forward to a special dividend of three cents a share that will come out of the $2.3 billion bonanza from the NetLink Trust sale plus an interim ordinary dividend of 6.8 cents cents a share. The distribution date will be announced next week.

The NetLink jackpot sent earnings per share soaring to 17.7 cents, from 6.1 cents in the same period a year ago. Net asset value was $1.84 a share, against $1.73 as at March 31.

The group's other second-quarter numbers were left a little in the shade by the one-off sale.

Underlying profits slipped 4.1 per cent to $929 million, owing to the hot competition in the Indian market, which dragged down the performance of regional associate Airtel.

The decline was in spite of a 6.9 per cent increase in revenue to $4.37 billion. This was spread across a 2.3 per cent uptick in the consumer business, a 5.5 per cent gain in the enterprise segment and an 88.6 per cent jump in the fledgling digital division.

Turnover at the consumer operations here, which makes up about one-fifth of Singtel's overall consumer business revenue, dipped 2.1 per cent in the quarter to $564 million. The local market took hits from voice-to-data substitution, the ascendance of SIM-only plans, a sales drop from smartphone launch timelines and a fall in the pre-paid customer base.

Smartphone launch timings also hurt revenue at Optus, Singtel's Australian business, down 1 per cent to A$1.702 billion (S$1.78 billion).

Still, overall revenue managed to rise on the back of contributions from digital marketing arm Amobee's recently acquired Turn, as well as growth in other digital and information communications technology (ICT) businesses such as cyber security services.

  • AT A GLANCE

  • REVENUE

    $4.37 billion (+6.9%)

    NET PROFIT

    $2.89 billion (+197.1%)

    DIVIDEND

    6.8 cents per share interim dividend and 3 cents per share special dividend

Digital and ICT revenue accounted for 25.1 per cent of turnover in the quarter, from 20.9 per cent last year.

Group chief executive Chua Sock Koong described the units' performance as "confirmation of the kind of momentum we are seeing in our digital efforts".

These prospects, she added, would be further explored in the wake of the NetLink Trust sale.

"The proceeds from the NetLink Trust divestment, we've got the special dividend, which would account for $500 million," said Ms Chua.

The rest could be ploughed back into Singtel's various operations.

Underlying quarterly net profit would have risen 2.5 per cent, if not for Airtel's poor showing. But Ms Chua noted that "regional markets remain attractive as our associates continue to drive customer growth and data consumption".

Singtel shares closed down two cents, or 0.5 per cent, to $3.76, after results were announced.

A version of this article appeared in the print edition of The Straits Times on November 10, 2017, with the headline 'NetLink Trust sale boosts Singtel's profit to $2.89b'. Print Edition | Subscribe