Singapore Telecommunications (SingTel) reported a significant 64% drop in its full-year net profit for the fiscal year ending 2023, primarily due to a substantial impairment charge of S$3.1 billion (RM10.8 billion). This impairment is largely attributed to its Australian mobile network operation unit, Optus.
Optus, Australia’s second-largest telecommunications company, has faced numerous challenges over the past year. These include a major network-wide outage, significant data breaches, and a notable decline in fixed carriage revenue. The increased capital costs have further strained the company’s financial performance.
- Total Non-Cash Charge: S$3.1 billion
- Goodwill Provision: S$2 billion
- Enterprise Fixed Access Network Assets: S$470 million
Despite these challenges, SingTel’s underlying net profit, excluding the one-time impairment charge, saw a 10% increase, reaching S$2.26 billion. This growth was driven by higher contributions from regional associates, including Bharti Airtel and Advanced Info Service.
For the fiscal year 2023, SingTel’s net profit stood at S$795 million, a sharp decline from S$2.23 billion in the previous year. Looking forward, the company has forecasted an earnings growth rate ranging from high single digits to low double digits for fiscal 2025. SingTel plans to focus on improving core performance at both Singtel Singapore and Optus. Additionally, the company aims to scale its growth engines, such as NCS and Nxera, while maintaining a leaner cost structure.
Key Financial Metrics (in S$ million)
| Metric | FY 2023 | FY 2022 | % Change |
|---|---|---|---|
| Net Profit | 795 | 2,230 | -64% |
| Underlying Net Profit (Excl. Charge) | 2,260 | 2,050 | +10% |
| Impairment Charge | 3,100 | – | N/A |
Optus, which remains SingTel’s top revenue generator, reported largely unchanged revenues at A$8.06 billion. Optus Interim CEO, Michael Venter, expressed optimism despite the challenges faced over the past 18 months. “Optus is working hard to rebuild the trust of customers after a challenging 18 months and these results demonstrate we are on the right track,” Venter stated.
SingTel has proposed a final dividend of 9.8 Singapore cents per share, up from 5.3 Singapore cents a year earlier. Additionally, the company unveiled a revised dividend policy, which includes a new value realization dividend of three to six Singapore cents per share per annum, supported by its capital recycling programme. This programme is expected to help return excess capital to shareholders.
Dividend Overview
- Final Dividend: 9.8 Singapore cents per share (Previous: 5.3 Singapore cents)
- New Dividend Policy: Includes a value realization dividend of 3-6 Singapore cents per share per annum
- Capital Recycling Programme: Potential to recycle around S$6 billion of assets over the medium term
Highlights:
- S$3.1 Billion Impairment: Primarily from Optus
- Underlying Net Profit Up 10%: Driven by regional associates
- Stable Optus Revenue: Despite setbacks
- Revised Dividend Policy: Enhancing shareholder returns
- Growth Engines: Focus on NCS and Nxera
SingTel’s strategy moving forward includes enhancing the performance of its core operations and expanding its growth engines. The company’s efforts in streamlining its cost structure and focusing on capital efficiency are expected to drive future growth.
Key Areas of Focus:
- Core Performance Enhancement:
- Strengthening operations in Singapore and Australia
- Rebuilding customer trust and reliability at Optus
- Scaling Growth Engines:
- Expansion of NCS and Nxera
- Leveraging technology and innovation to drive growth
- Cost Efficiency:
- Implementing a leaner cost structure
- Optimizing capital allocation and recycling assets
The telecommunications sector in Australia has been increasingly competitive, with Optus facing heightened pressure from both market dynamics and operational challenges. The network outage and data breaches have not only impacted financial performance but also customer trust and brand reputation.
- Network Outage: Significant disruptions impacting service reliability
- Data Breaches: Compromising customer data and trust
- Revenue Declines: Notable drop in fixed carriage revenue
- Increased Costs: Higher capital expenditures straining profitability
Despite the significant impairment charge and the challenges faced by Optus, SingTel remains focused on its strategic initiatives to drive growth and enhance shareholder value. The company’s efforts in improving core operations, scaling growth engines, and maintaining cost efficiency are expected to support its future financial performance.
As SingTel navigates these challenges, its commitment to enhancing customer trust and operational efficiency will be crucial in achieving its long-term growth objectives.
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