Singapore’s leading telco, Singtel said the macroeconomic outlook has become more challenging with persistently high inflation and rising interest rates likely to continue curbing economic growth.
Singtel Group CEO Yuen Kuan Moon added that the group was “well-positioned to weather the headwinds” given its robust financial position and cash generation.
The company’s asset recycling programme has reduced its net debt by S$3.4 billion or nearly a third from a year ago, with more than 90 percent of the remaining debt locked into fixed interest rates.
The telco approved an interim ordinary dividend of 4.6 Singapore cents per share for the half year ended September 30, 2022, totalling S$760 million. This represents 76 percent of the Group’s underlying net profit for the first half of the year.
A special dividend of 5.0 Singapore cents per share, totalling S$826 million, was also approved to share the benefits of the Group’s asset recycling initiatives with shareholders. It will be paid in two tranches of 2.5 Singapore cents each, together with the ordinary dividends
Net profit up
Singtel’s first-half net profit rose 23 percent to S$1.17 billion, compared to a net exceptional loss the previous year.
The earnings were boosted by a net exceptional gain from a partial divestment of its stake in its Indian subsidiary Airtel.
In September, Singtel sold 3.3 percent of its direct stake in Airtel for net sales proceeds of S$2.5 billion and recorded a gain of S$1.01 billion. [pdf].
Singtel’s half-year operating revenue was down 5 percent to S$7.26 billion due to adverse currency effects and the absence of revenue from NBN migration and Amobee from which the company divested its stake in July this year.
Yuen noted that Singtel’s IT services arm NCS delivered a 20 percent increase in operating revenue during the reporting period and its global business crossed the S$200 million mark to account for 16 percent of the telco’s revenue, supported by contributions from recently acquired Australian IT and digital services companies.
He added that NCS capitalised on the digitalisation trend to add new bookings of S$1.3 billion to deliver an order book of S$3.5 billion.
Yuen said: “With the S$2.5 billion we’ve raised from partially divesting our direct stake in Airtel, we’ve recycled some S$6 billion in the past 18 months since setting out to proactively monetise our assets to achieve better capital efficiency. We’ve also reduced our net debt by nearly a third from a year ago to buttress our balance sheet in these uncertain times.”
Commenting on Singtel’s Australian subsidiary, Optus, Yuen said the rapid and successive interest rate hikes, a weaker Australian dollar and softer consumer and business sentiment due to a slowing economy have resulted in a “non-cash impairment charge of S$1 billion on Optus’ goodwill”.
More on Optus here.
Yuen added, the company remained focused on executing its strategic reset, “including growing 5G market share, expanding the footprint of its new digital businesses and scaling up NCS,” as it transforms itself into a leading technology services firm in the Asia Pacific.