Singtel Slides
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H1FY21 Financial Results Presentation For the half year ended 30 September 2020 Chua Sock Koong, Group CEO 12 Nov 2020 Forward looking statement – Important note The following presentation contains forward-looking statements by the management of Singapore Telecommunications Limited ("Singtel"), relating to financial trends for future periods, compared to the results for previous periods. Some of the statements contained in this presentation that are not historical facts are statements of future expectations with respect to the financial conditions, results of operations and businesses, and related plans and objectives. Forward-looking information is based on management's current views and assumptions including, but not limited to, prevailing economic and market conditions. These statements involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the statements as originally made. Such statements are not, and should not be construed as a representation as to future performance of Singtel. “S$” means Singapore dollars, "A$" means Australian dollars and “US$” means United States dollars. Any discrepancies between individual amounts and totals are due to rounding. 2 Agenda 1. H1FY21 overview 2. Business units 3. Outlook & dividend 4. Supplementary information H1FY21: business review Operating results weighed down mainly by Australia Consumer amid structural challenges & COVID-19 • Adverse margin impact from NBN resale & declining NBN migration revenue • COVID-19: Severe reduction in roaming, prepaid usage & equipment sales Robust growth in ICT services • Leveraged our digital investments to support enterprise & government digital transformation • Strong revenue growth across NCS’ business lines, cloud & cyber security Critical services to our customers • Supporting their need for seamless connectivity & digital solutions for business recovery Transforming our business for the digital economy • Digitalise our core to enhance customer engagement & transform our processes • Leverage 5G to unlock new revenue streams & deliver returns over the mid to long term 4 H1FY21: financial review (S$m) H1FY21 H1FY20 (YoY%) • Decline in equipment sales, roaming & prepaid mobile, mitigated by ICT growth Operating Revenue 7,425 8,265 10% • NBN migration revenue tapering off with near-completion of rollout • Optus impacted by lower margins from equipment sales & EBITDA 1,903 2,345 19% NBN resale • Significant margin impact from roaming decline EBIT (excluding associates) 596 1,060 44% • Mitigated by Job Support Scheme (JSS) credits2 • Strong operating momentum in India & Africa Regional Associates’ PBT1 833 749 11% • Intense competition in Indonesia & prolonged COVID lockdown • Reduced exceptional Airtel regulatory costs Underlying NPAT 837 1,312 36% • Prior period net losses due to significant regulatory losses Net profit after tax 466 (127) N.M. from adjusted gross revenue in Airtel 1. Excludes exceptional items. 2. Includes S$94m in Job Support Scheme credits in H1FY21. N.M. –not meaningful 5 Q2FY21 : sequential quarter revenue recovery Singapore Consumer Australia Consumer 248 244 243 866 869 863 855 853 218 1 194 817 186 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Mobile service revenue (S$m) Mobile service revenue (A$m) Group Enterprise Group Digital Life 871 228 214 202 803 187 761 758 769 161 719 682 767 688 676 107 731 658 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Carriage revenue (S$m) ICT revenue (S$m) Amobee revenue (US$m) 6 1. Includes waiver of late payment fee for all customers and free credits for healthcare workers. Focus on digitalisation Singapore Consumer Australia Consumer 69% 82% 42% 20% Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 % of online sales transactions % of self-help transactions % of online sales transactions % of self-help transactions Dash mobile wallet H1FY21: Up 3x YoY Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Transaction value (S$) 7 A 5G Future Game changer for smart cities & living Ultra-fast speeds Massive connectivity Low latency Enable innovative platforms, applications & services Manufacturing Transport Energy & utilities Healthcare Media & entertainment Ascending the 5G value chain Co-create enterprise applications Successful commercial trial Broke Australia record for commercial 5G speeds 5G Postpaid Singtel Mobile Edge Download customers in Computing (MEC) Speed platform >20k Singapore >2.5Gbps 8 Financial position Free cash flow S$1.7b 14% (S$m) 1,993 Balance Sheet1 Singapore 346 1,705 S$12.7b Net debt1 Singapore 323 S$23m Australia 550 Australia 332 32.1% Net debt gearing2 S$218m Net debt: EBITDA & share of Associates’ dividends 2.3x associates’ pre-tax profits Associates 1,097 1,051 S$46m H1FY20 H1FY21 1. Gross debt less cash and bank balances adjusted for related hedging balances. 2. The ratio of net debt to net capitalisation. Net capitalisation is the aggregate of net debt, shareholders’ funds and minority interests. 9 Agenda 1. H1FY21 overview 2. Business units 3. Outlook & dividend 4. Supplementary information Singapore Consumer S$m Revenue EBITDA S$m Revenue EBITDA 15% 19% 1,081 466 871 14% ( 20% ex JSS) 406 2% ( 10% ex JSS) 379 326 162 164 H1FY20 H1FY21 H1FY20 H1FY21 Q1FY21 Q2FY21 Q1FY21 Q2FY21 H1 Sep 2020 (YoY) Q2 Sep 2020 (QoQ) • Declines in roaming, prepaid customers (foreign workers • Mobile service revenue recovery since July with pickup & tourists) & equipment sales due to COVID-19 in prepaid top-ups • Continued voice erosion • Handset sales rose on higher demand with easing of lockdown • EBITDA impacted by declines in revenue, particularly higher-margin roaming revenue • Ex-JSS, EBITDA up on revenue pickup 11 Australia Consumer A$m Revenue EBITDA A$m Revenue EBITDA 1 11% ( 10% ex NBN ) Stable (Stable ex NBN1) 3,857 3,427 1,717 1,710 1 31%( 32% ex NBN ) 9% ( 15% ex NBN1) 1,333 924 441 483 H1FY20 H1FY21 H1FY20 H1FY21 Q1FY21 Q2FY21 Q1FY21 Q2FY21 H1 Sep 2020 (YoY) Q2 Sep 2020 (QoQ) • Weaker customer spending, reduced prepaid & roaming revenue & fee income from customer support measures2 • Mobile Service revenue increased, with Optus Choice Plans driving higher ARPU • Decline in handset sales volume & increased mix of lower- priced devices • Continued competition in fixed space & shift towards ( 10% ex JSS) lower-priced devices • NBN migration revenue tapering off with near completion of network rollout • EBITDA in Q1 was heavily impacted by COVID support measures2 • EBITDA down on lower equipment margin & fixed margin erosion with NBN resale 1. NBN migrations revenue HY1FY20 A$284m, H1FY21 A$209m, Q1FY21 A$108m & Q2FY21 A$101m. 12 2. Includes waiver of late payment fee for all customers and free credits for health care workers. Group Enterprise S$m Revenue EBITDA S$m Revenue EBITDA 3% 7% 2,931 2,857 1,480 1,378 Carriage 1,519 1,335 12% 676 3% Carriage 658 7% ( 14% ex JSS) 7% ( 16% ex JSS) 8% ICT 1,413 1,522 ICT 719 803 12% 806 750 363 387 H1FY20 H1FY21 H1FY20 H1FY21 Q1FY21 Q2FY21 Q1FY21 Q2FY21 H1 Sep 2020 (YoY) Q2 Sep 2020 (QoQ) • Robust ICT performance led by: • Robust ICT growth in Singapore & Australia o Broad based growth across NCS’ business lines Asia Pacific cyber security & cloud services • Australia ICT revenue boosted by demand for o collaboration tools & equipment to support work from o Growing data centre demand home arrangements • Offset by carriage competition & COVID-driven • Increase in carriage due to stronger handset sales declines in roaming & equipment sales • Ex JSS, EBITDA up 16% on stronger revenue • Lower EBITDA due to carriage, partly offset by wage credits 13 Group Digital Life S$m Revenue EBITDA S$m Revenue EBITDA 71% 30% 590 261 414 153 N.M 58% ( 57% ex JSS) 3 -36 -18 -15 H1FY20 H1FY21 H1FY20 H1FY21 Q1FY21 Q2FY21 Q1FY21 Q2FY21 H1 Sep 2020 (YoY) Q2 Sep 2020 (QoQ) • Revenue declined with reduction in customer • Revenue increased as economic activity slowly advertising budgets & lower milestone-based resumed revenue from iTV • EBITDA turned positive with revenue growth & cost • EBITDA losses narrowed due to de-consolidation of measures to manage the impact of business HOOQ slowdown Business highlights • DataSpark supported public health & transport initiatives to fight COVID-19, leveraging its population-wide mobility insights • Amobee named a “Leader” in Gartner’s Magic Quadrant for Ad Tech for 2020 14 Regional Associates Half year PBT 1 %Change %Change Highlights September 2020 (S$m) (S$) (constant ccy) • Improved Airtel financial performance offset COVID Regional Associates 833 11% 11% driven weakness & competition in other markets • Competition & accelerated decline in legacy services, Telkomsel 467 (18%) (16%) mitigated by cost control Airtel2 (30) 89% 88% • India: Robust revenue growth, underpinned by strong India (92) 72% 70% 4G customer momentum & up-trading ; 160m digitally- Africa 93 (6%) (1%) engaged users Others3 (14) 14% 9% • Africa: Sustained operating momentum offset by BTL (18) 40% 37% higher fair value losses • Service revenue weakness AIS 166 (16%) (16%) • Higher depreciation & amortisation from network & spectrum investments Intouch 48 (13%) (13%) • Lower contribution from AIS • Reduction in prepaid top-ups from weak economic Globe 182 (10%) (15%) conditions 1. Excludes exceptional items. 2. Airtel’s pre-tax losses were S$274m in the prior comparative period. 15 3. Includes South Asia & Others. Agenda 1. H1FY21 overview