Singtel shareholders to get 35% higher dividend after rise in first-half underlying profit

SINGAPORE - Singtel raised its interim dividend by 35 per cent to seven cents as it reported higher underlying first-half earnings on Nov 13.

Excluding one-off items, underlying net profit – which Singtel said was the basis of its core dividend payout – rose 6 per cent to $1.19 billion. It was up 9 per cent in constant currency terms.

Singtel credited this to better performance from its mobile business, disciplined cost management at its Australian unit Optus and continued margin improvements and solid bookings at its technology services arm NCS.

Its board declared an interim dividend of seven cents per share, up from 5.2 cents a year earlier. This comprises a core dividend of 5.6 cents per share and a value realisation dividend of 1.4 cents per share. 

Both will be paid out on Dec 9.

At the same time, the telco’s net profit for the six months to September fell 42 per cent to $1.23 billion from $2.14 billion in the year-ago period. This missed a forecast of $1.37 billion, Reuters reported.

The bottom line was hurt by the absence of an exceptional gain of $1.2 billion in the corresponding period in 2023 from an issuance of shares by Singtel’s Indonesian associate Telkomsel to integrate IndiHome, Indonesia’s largest fixed broadband provider.

Telkomsel in 2023 agreed to merge with its parent’s IndiHome broadband arm in an effort to expand into Indonesia’s fixed broadband market.

Singtel’s group chief executive Yuen Kuan Moon said, “Our half-year results show continued growth in our underlying earnings, indicating a solid start to our Singtel28 plan to lift business performance. Optus and NCS drove the positive momentum, underscoring our focus on execution and operating rigour.

“The progress we have made in our core businesses, growth engines and active capital management has been reflected in the steady increases in our dividend payouts since our strategic reset in 2021. The changes have been well received by the investment community.”

Revenue for the half year dropped 0.5 per cent to $6.99 billion, which Singtel described as “stable” after the divestment of its cyber-security arm Trustwave.

The group’s earnings before interest and taxes (Ebit) rose 27 per cent to $738 million. Optus saw a 58 per cent surge in Ebit, while NCS’ jumped 40 per cent.

Singtel said it expects Ebit to grow by low double digits for fiscal 2025.

Mr Yuen said the priority for the second half year is to drive further Ebit improvements and increase shareholder returns through enterprise growth in Singapore and Australia, greater mobile momentum in Australia and a leaner overall cost structure.

He added that Singtel will continue scaling NCS and building out Nxera’s data centres which will commence operations from mid-2025 to meet increasing demand.

On Singtel’s dividend payout, analysts told The Straits Times the increase in first-half dividend exceeded their expectations.

DBS analyst Sachin Mittal saw it as “a positive surprise” because “we had expected the value realisation dividend to be paid out only at the year end”.

On the group’s prospects, CGS International equity analyst Kenneth Tan said: “Singtel’s improved earnings guidance indicates better confidence in its second-half results and its outlook, which it narrowed down to low double-digit growth, from a much wider range previously.”

He added that Singtel’s meaningful operating profit margin expansion seems to show that its cost management efforts appear to be yielding tangible benefits, particularly for NCS and Optus.

Singtel shares rose after its earnings announcement, closing up 1 per cent at $3.19 on Nov 13.