Singtel swings to $466.1 million first-half profit on lower exceptional losses

Singtel's operating revenue for the half year was down 10.2 per cent to $7.42 billion. PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Singapore Telecommunications (Singtel) on Thursday (Nov 12) posted a net profit of $466.1 million for the six months ended Sept 30, 2020, reversing from a net loss of $127 million a year ago.

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

Earnings per share stood at 2.86 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 $7.42 billion, from $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 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 $1.3 billion and that the group's capital expenditure, including for 5G networks, will be around $2.2 billion, comprising A$1.5 billion ($1.47 billion) for Optus and $700 million for the rest of the group.

Singtel shares closed at $2.23 on Wednesday, up $0.01 or 0.5 per cent.

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