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Singtel's 1QFY2022 net profit up by 41.3% y-o-y to $628 mil

Felicia Tan
Felicia Tan8/24/2022 01:10 PM GMT+08  • 4 min read
Singtel's 1QFY2022 net profit up by 41.3% y-o-y to $628 mil
The Singtel building in Singapore. Photo: Samuel Isaac Chua/The Edge Singapore
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Singapore Telecommunications (Singtel) has reported a net profit of $628 million for the 1QFY2022 ended June, 41.3% higher y-o-y. The improvement was due to better operational performance and a net exceptional gain from Airtel.

During the period, Airtel’s one-off items included a fair value gain on revaluation of its foreign currency convertible bonds and recognition of a deferred tax credit in Africa.

The dilution of Singtel’s effective shareholding in Australia Tower Network (ATN) also contributed to the higher net profit.

In the 1QFY2022, Singtel’s underlying net profit rose by 10.7% y-o-y to $499 million.

Despite the higher net profit, Singtel’s operating revenue fell by 5.6% y-o-y to $3.58 billion due to the absence of contributions from NBN migration and Amobee, which was classified as a “subsidiary held for sale” as at March 31. Amobee had ceased to be consolidated on a line-by-line basis on April 1.

A 4% depreciation of the Australian dollar also contributed to the lower operating revenue.

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Singtel’s EBITDA for the 1QFY2022 was down by 2.0% y-o-y for the same reasons.

However, underlying operating revenue and EBITDA were up by 4.1% and 5.4% y-o-y respectively on a constant currency basis due to the roaming rebound across Singapore and Australia.

“This set of positive results reflects the progress made on our strategic reset designed to strengthen our core, unlock the value of our assets and grow new digital businesses,” says group CEO Yuen Kuan Moon.

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“Our growth engine and info-communications technology (ICT) arm NCS booked $600 million in new projects across various sectors and we’ve made the requisite investments to strengthen its capabilities and competitive edge to deliver long-term growth,” he adds.

In Singtel’s Singapore consumer segment, both operating revenue and EBITDA improved on the back of the higher number of travellers as border control measures relaxed. Operating revenue increased by 3.4% y-o-y due to higher mobile service, fixed broadband and equipment sales, partly offset by lower TV revenue.

Optus’ operating revenue and EBITDA saw y-o-y declines due to the lack of NBN migration revenue. Excluding that, the segment’s operating revenue and EBITDA saw y-o-y growth despite the “challenging market conditions” from competitive pricing and weaker consumer confidence. NBN migration revenue was A$42 million ($40.4 million) in the last corresponding June quarter, while no revenue was recorded in the current quarter.

Optus’ mobile service revenue grew 2.4%, driven by continued Choice plan penetration as well as higher roaming and prepaid mobile revenues from the continued recovery in international travel, offsetting the decline in insurance revenue as Optus concluded its exit of the business. Satellite revenue was higher on increased equipment sales. Mobile equipment sales fell due to lower volume.

Group enterprise saw slightly higher y-o-y operating revenue and EBITDA thanks to higher roaming and ICT services revenues, offset by higher utility expenses.

NCS’s operating revenue was up due to broad-based growth across all lines of its business and the contributions from the businesses acquired in the last six months. EBITDA however, fell due to investment in capabilities and higher staff wages.

Trustwave’s operating revenue plunged, while EBITDA saw higher losses following the divestment of its payment card industry compliance business in October 2021 and the transfer of its Asia Pacific business to Singtel, NCS and Optus with effect from April 1.

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Further to his statement, Yuen says the group will leverage its 5G assets to drive growth. Singtel was the first to deliver a 5G standalone network in Singapore in August, while Optus achieved the fastest 5G speeds in Australia.

Looking ahead, Yuen expects the operating environment to “remain challenging” amid the rising inflation and interest rates, along with the ongoing geopolitical tensions.

“We will need to stay nimble and contend with these realities should they put further pressure on our costs and bottomlines,” he says.

As at 1.09pm, shares in Singtel are trading 1 cent higher or 0.38% up at $2.64.

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