Singtel 'not in a position to speculate' on capex for 5G

MS CHUA SOCK KOONG.
MS CHUA SOCK KOONG.PHOTO: SINGTEL

IMDA has yet to determine specific network and market requirements for fifth-generation services in Singapore

Singtel group chief executive Chua Sock Koong said yesterday that the company is not in a position to speculate on what the capital expenditure (capex) could be for fifth-generation (5G) mobile technology in Singapore.

This is because the Infocomm Media Development Authority (IMDA) has yet to determine specific network and market requirements for the 5G services.

Ms Chua made the comments yesterday during Singtel's earnings briefing, during which reporters had asked whether the planned roll-out of 5G technology here would lead to any ramp-up capex - which Singtel has projected to come in at $2.2 billion in the coming year, largely on the back of the Optus subsidiary in Australia.

Ms Chua noted that spectrum availability will not be until calendar year 2021, "in which case, the significant capex spending would only, for the Singapore 5G network, happen then".

"We will continue to make investments in building our 5G use cases, before the big roll-out, which will probably be more like the 2021 kind of timeline - assuming that we win the 'beauty contest', after the IMDA rules are finalised as to how 5G is going to be rolled out."

By "beauty contest", she was referring to the authorities' plan to call for proposals on 5G network development, with the spectrum to be awarded to two winning bidders.

Ms Chua added that Singtel's Australian unit Optus has already been rolling out fixed-wireless access 5G capabilities in that market, "so that capex programme continues... and the capex guidance that we have provided would include further 5G spend".

The mainboard-listed telco posted a 21.4 per cent drop in full-year earnings - shorn of one-off items - to $2.83 billion.

For the full year, net profit fell 43.5 per cent to $3.09 billion, from $5.47 billion a year ago, mainly due to an "exceptional gain" the previous year from its NetLink Trust divestment, and lower contributions from the trust as a result.

GOING FORWARD

We will continue to make investments in building our 5G use cases, before the big roll-out, which will probably be more like the 2021 kind of timeline - assuming that we win the 'beauty contest', after the IMDA rules are finalised as to how 5G is going to be rolled out.

MS CHUA SOCK KOONG, Singtel's group chief executive, referring to the authorities' plan to call for proposals on 5G network development, with the spectrum to be awarded to two winning bidders.

Net profit for the fourth quarter to March 31 rose 0.4 per cent to $773 million, from $769.6 million a year ago.

Earnings per share for the quarter was 4.74 Singapore cents, from 4.72 cents a year ago.

Singtel's board is recommending a final dividend of 10.7 cents per share, bringing the total ordinary dividend per share for the year to 17.5 cents. If approved by shareholders, the dividend will be paid on Aug 15.

Moody's, which had cut Singtel's senior unsecured ratings down to "A1" - a notch below "Aa3" - in 2017, lowered its outlook on the company from "stable" to "negative" in March.

But Ms Chua said yesterday: "We have one of the strongest credit ratings amongst telcos... I believe the numbers speak for themselves, looking at our overall gearing levels and our free cash flow generation."

Free cash flow for the full year was $3.65 billion, with net debt gearing of 24.9 per cent.

Meanwhile, mobile service turnover in Singapore fell by 2.1 per cent for the quarter and 3.8 per cent for the full year, with average revenues per user (ARPU) lower for both post-paid and pre-paid mobile.

Singtel said in its financial statements that post-paid ARPU was down by 9 per cent year on year to $41, on higher penetration of SIM-only plans and lower data prices, even as the pre-paid customer base shrank amid migration to post-paid SIM-only plans.

When asked about the SIM-only and unlimited data options that have hit the market - a calling card of mobile virtual network operator rivals - Mr Yuen Kuan Moon, who oversees the Singapore consumer business, argued that "it's not just purely looking at data plans".

"We have a combination of different mobile plans to provide, to satisfy the needs of the various segments of the market.

"Moreover, if you look at some of the bundled plans, we are not only just offering a large data bundle, but we are also offering it with content," he said, highlighting mobile consumer products at different price points, such as HBO pay-television bundles and a diversity of plans from Combo XO to the no-frills Gomo.

Singtel's fledgling digital life segment saw double-digit revenue growth, but also posted widening losses before interest, tax, depreciation and amortisation to the tune of $92 million for the 12 months - dragged down by video-on-demand streaming service Hooq and other assets.

Singtel's enterprise revenues slid by 2.7 per cent for the quarter and 2.3 per cent for the full year, with DBS telecoms analyst Sachin Mittal arguing on Monday that the segment would still face pressure in the next 12 months, as legacy carriage operations such as voice services are "unlikely to be adequately offset by growth in the ICT (infocomm technology) business".

A version of this article appeared in the print edition of The Straits Times on May 16, 2019, with the headline 'Singtel 'not in a position to speculate' on capex for 5G'. Print Edition | Subscribe