Q4 FY16 Earning Conference Call 12 May 2016

CORPORATE PARTICIPANTS Ms Sin Yang Fong – Vice President, IR Ms Chua Sock Koong – Group CEO Ms Lim Cheng Cheng – Group CFO Ms Jeann Low – Group CCO Mr Allen Lew – CEO, Consumer Mr Yuen Kuan Moon – CEO, Consumer Mr Bill Chang – CEO, Group Enterprise Mr Mark Chong – CEO, International Mr Samba Natarajan - CEO, Group Digital Life Mr Murray King – CFO, Consumer Australia

CONFERENCE CALL PARTICIPANTS Mr Roshan Raj – Bank of America Merrill Lynch Ramakrishna Maruvada – Daiwa Mr Sachin Gupta – Nomura Securities Mr Arthur Pineda - Citigroup Ms Wei Shi Wu – BNP Paribas Mr Choong Chen Foong - CIMB Mr Prem Jearajasingam– Macquarie Bank Mr Raymond Tong – Goldman Sachs Mr Gopa Kumar – Nomura

Start of Transcript

Operator

Ladies and gentlemen welcome to 's FY16 Q4 results conference call. If you have any issues during the call please press star zero to speak to an operator. Ms Sin, over to you.

Ms Sin Yang Fong – Vice President, IR

Thank you Vincent. Good morning and a warm welcome to all investors and analysts. You are listening to Singtel's earnings conference call for the fourth quarter and financial year ended 31 March 2016. My name is Sin Yang Fong. Let me introduce management on the call. We have Ms Chua Sock Koong, Group CEO; Mr Allen Lew, CEO Consumer Australia; Mr Yuen Kuan Moon, CEO Consumer Singapore; Mr Bill Chang, CEO Group Enterprise; Mr Samba Natarajan, CEO Group Digital Life; Mr Mark Chong, CEO International; Ms Lim Cheng Cheng, Group CFO; Ms Jeann Low, Group Chief Corporate Officer; Mr Murray King, CFO Consumer Australia. They are also assisted by other members of the management teams from Australia and Singapore.

Before we start taking questions I would like to invite Sock Koong to share some highlights from this set of results.

Page 1 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Ms Chua Sock Koong – Group CEO

Thanks Yang Fong. Let me just give you some quick highlights for the quarter's results. The Group posted a very strong performance for the quarter and the financial year. That's a reflection of the very resilient core business and higher contributions from our associates. During the year, we grew our digital and ICT businesses and continued to drive mobile data with the investments that we have made in network, spectrum and content. This was against a slowing economy globally and weaker currencies for the Group's overseas operations.

We've increased penetration of smart phones and OTT services. The telco sector continues to experience contraction in voice and traditional carriage services. Net profit for the quarter was stable and would have risen 4% on constant currency basis. Excluding losses on Trustwave, net profit rose 2% and 5% in reported and constant currency terms respectively.

Group revenue fell 6% due to deep cuts in the Australian mobile termination rates. Excluding the impact on mobile termination rate cuts and currencies, revenue rose 2%. continues to add fixed and mobile customers and successfully upsold higher values and bundled plans. In Singapore, performance was impacted by lower handset sales.

In the Enterprise Segment, we strengthened our position as a leader in ICT and international data services. EBITDA for the Group was stable despite currency weakness.

The associates are successfully capturing the rise in demand for mobile data services in their markets. However, growth in customers and mobile data usage were partially offset by higher depreciation and amortisation costs on network and spectrum investment.

Pre-tax profits from the regional mobile proceeds rose 12% with strong growth from Telkomsel. Free cash flow fell 29% reflecting higher vendor payments and timing differences in the receipt of associates' dividends.

In the quarter, the Group's results were impacted by the decline in the Australian dollar. The Australian dollar declined 5% year on year and also in the regional currencies particularly, the Indian rupee that declined almost 5% year on year as well. For the full year, the Australian dollar and the Indonesian rupiah also fell, the Australian dollar fell 9% and the Indonesian rupiah fell about 4%.

So for the full year, net profit grew 2% driven by regional mobile associates' strong performance. Exceptional items comprised mainly gains from the disposal of venture investments and the Group's share of Airtel’s net exceptional gain partially offset by currency translation losses.

Excluding exceptional losses from Trustwave and one-off tax rebates last year, underlying net profit increased 2% and would have grown 6% in constant currency.

Let me hand over to Yang Fong for Q&A.

Ms Sin Yang Fong – Vice President, IR

Thank you. And also remind you that the Group has maintained its dividend at 10.7 cents per share. That makes our full year payout of 17.5 cents per share. Participants, I advise that this call is being recorded for playback and transcription. We will now invite questions from participants. Our operator will assist you to put through your questions.

Page 2 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Operator

We will now begin the question and answer session. Participants with questions to pose please press star one on your telephone keypad and you will be placed in the queue. To cancel the queue please press the pound or hash key. Your first question today comes from the line of Roshan Raj from Merrill Lynch. Your line is now open.

Mr Roshan Raj – Merrill Lynch

Hi. Thanks for the opportunity. Two questions. First if I look at the mobile revenue trends in Singapore, it's sort of going in a down trend. I mean two years ago you were looking at mid-single digit revenue growth then it became low single digit and now more stable. So if I extrapolate beyond FY17, I'll be looking at mobile revenue going backwards. If not, why would that be the case? Some color there would be very helpful.

The second question is your bigger picture view on Australia. The last couple of years the AUD has continued to depreciate. Unless you take a reasonably positive view or a different view every dollar you're spending in this market could possibly be worth less in a few years' time. So the offsetting benefit could be if you are able to outgrow the market so that the investment that you're making in this market pays off. So some thoughts on how you look at the Australian opportunities will be helpful.

Those were the two questions. I have some follow-ups.

Ms Chua Sock Koong – Group CEO

Okay let me take the Australian opportunity question first. So let me answer that question. When we look at our investments in the businesses that we have obviously we are looking - we also look at overall growth and risk management. We see the Australian market as the second largest telecommunications market in Asia outside of .

As the second player in the market we see that as a very attractive business proposition. The AUD exposure is something that we manage. They are also - in addition to the kind of translations or differences that you see, we also put in place economic hedges where we try to - where we match the cash flow and underlying cash flow currencies of the underlying cash flow. So we would have taken out a fair amount of AUD liability to match our AUD assets. So that's an economic hedge to protect our overall financial position. So I would say that our Australian investment is made looking at the expected returns in the context of the level of risk that we assumed for the business.

Maybe I will hand over to Moon to talk about revenue trends in Singapore.

Mr Yuen Kuan Moon – CEO, Consumer Singapore

Thank you Sock Koong. The mobile revenue trend is moving in the direction that we had anticipated. If you look at the growth of the mobile revenue it is primarily driven by mobile data usage. That has been growing very strongly as we see a lot of our customers taking up more data and signing up higher data packages. But at the same time the revenue is also driven by other usage like the voice usage as well as the roaming usage, both contributing a big part of the Singtel mobile revenue. What Page 3 of 18 Q4 FY16 Earning Conference Call 12 May 2016

we are seeing, the trend of slowing down is actually on the roaming portion. We see many of our customers are now switching, substituting their voice roaming with data roaming. That's why you see a bit of a slowdown in roaming revenue. In fact that has come off quite a fair bit in the last two quarters.

The roaming portion, while the revenue has come down we have also managed our costs of the roaming interconnect costs as well so thereby protecting the margins on the roaming business. So we continue to see data roaming growing, especially domestically, as people use more. So we have to see how much more that the slowdown of the roaming revenue will come off and therefore we have guided the market to say that going forward, we expect the mobile revenue to be stable.

Mr Roshan Raj – Merrill Lynch

Thanks. Two follow-ups. One for Sock Koong on the response on Australia. Will you be looking at some sort of option to sort of monetise some of the benefits on the investment in Australia be that in the form of listing or partial divestment? Or it's completely not under consideration in the foreseeable future?

The follow-up for Moon would be what portion is roaming revenue now? If you take roaming out of the equation is the core non-roaming mobile revenue growing? Is that the one we should be excited about over the medium to long term?

Ms Chua Sock Koong – Group CEO

Okay I think you know as a Group we have always been financially disciplined. We review the assets that we own whether it's subsidiaries, associates. We look at what makes sense, best sense for the company. As a wholly owned subsidiary, central management of cash flow, we would see whether listing any business creates more value for shareholders. Clearly if it is the case for whatever reason the market values the business more than what is shown in the sum of parts we may look at some options. It is all around what creates the most value for shareholders. In the end we value the business on its own merits, on its cash flow generation, on its growth, on the stability of the contribution to the Group.

Moon, you want to take the next question?

Mr Yuen Kuan Moon – CEO, Consumer Singapore

Roaming revenue as a percentage of total mobile revenue has moved to 21% this quarter - 22% this quarter. It used to be 23% the previous quarter.

Mr Roshan Raj – Merrill Lynch

Alright, thanks a lot Sock Koong and Moon.

Page 4 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Operator

Your next question today comes from the line of Ramakrishna Maruvada from Daiwa. Your line is now open.

Ramakrishna Maruvada – Daiwa

Hi. Good day. I have a couple of questions. Maybe starting on Optus. I would like to understand the movements on the operating cash flow please. If I look at the full year, there is a decline in the operating cash flow mainly because of negative working capital? I'm just wondering is this cyclical in the sense that should you have a cash in-flow going forward or are these CapEx - delayed CapEx payments flowing through as working capital line? The reason for that is your guidance for free cash flow for the coming year for FY17 is flat year on year for the Group level. So I'm just wondering what's driving this negative working capital.

The second related question is to do with the overall CapEx cycle in Optus. What do you expect will be sustainable CapEx a few years out? When do you expect the CapEx level to peak?

Finally, could you talk about the TPG deactivations? How many customers have moved over because of the TPG contracts this quarter? Do you have any more leftover that you could - customers that could move out in the following quarter?

Ms Chua Sock Koong – Group CEO

Allen, do you want Murray to answer since Murray is here?

Mr Allen Lew – CEO, Consumer Australia

Murray can answer the cash flow and CapEx. Then I'll speak on the TPG one.

Mr Murray King – CFO, Consumer Australia

Yes, so in relation to the question on the Optus cash flow you are correct in relation to the fact that the cash flows were impacted by negative working capital movements. This is the result predominantly of investment in customer acquisition and customer retention. So those increased costs have impacted the working capital position and to a certain degree, the phasing of vendor payments also has impacted the working capital position.

As we look forward we don't obviously provide guidance in respect of specific Optus cash flows but you've seen us provide guidance in relation to the Group free cash flow to be essentially stable year on year. Optus will be a contributor to that position.

The CapEx position, you've seen in our free cash flow our cash CapEx position stayed relatively stable, at around $1 billion for this year. We are in the midst of a three year program investment in networks. We are also investing heavily in customer IT systems. Again you've seen us provide guidance in the outlook statement in the MD&A, our accrual CapEx for next year around AU$1.8 billion. Which, as I Page 5 of 18 Q4 FY16 Earning Conference Call 12 May 2016

said, predominantly relates to our network investment under the program we're currently going through.

Mr Allen Lew – CEO, Consumer Australia

With regards to your question on TPG, I can't share with you the details about the numbers. But I think all I can say is that obviously the wholesale customers are lower ARPU customers and basically we'll be managing this in a way that best meets the needs of our customers in an environment where TPG is offering a dual supply network arrangement to their customers. So we are in there competing with one other network operator and basically we'll be managing this business going ahead.

Ramakrishna Maruvada – Daiwa

Okay, sorry, can I just clarify on the working capital please. Because the swing you had in the full year is A$723 million. So you attributed it to investments. So my question is, I find it a little bit hard to digest that kind of a swing, unless you expect a similar quantum going forward for the current financial year. So vis-à-vis a flat overall Group free cash flow guidance. So I'm just trying to understand whether these investments are handset-related, in which case they should flow back. Or what exactly would these investments be?

Mr Murray King – CFO, Consumer Australia

Just in relation to your question, the $700 million, as I said, predominantly related to investment in customer acquisition and customer retention activity. The flow back impact, we don't provide specific guidance in respect of flow back, but essentially a lot of the working capital movement has resulted in an increase in unbilled receivables. Obviously we start to build those receivables in subsequent financial years, so there will be some improvement in the working capital position as we start to invoice those unbilled receivables.

Ramakrishna Maruvada – Daiwa

Okay, thank you very much.

Operator

Our next question today comes the line of Suresh Mahadevan from UBS, your line is now open.

Suresh Mahadevan – UBS

Yes, thanks for the opportunity. I had a few questions. First is the question on data upsizing in Singapore. It seems like 29% of your subscribers are still exceeding the tiered plan, so you are just charging a very small sum to double their - or give them a lot of data. So just wanted to understand the logic on that. Is it a bet that 71% will opt for it? So that is question number one. The second question is on the Group digital business. This is related to - I mean clearly it seems like Amobee is Page 6 of 18 Q4 FY16 Earning Conference Call 12 May 2016

a large part of it and others are still very, very small. So just wanted to understand how to look at this business on a three, five year view. I mean what are some of the key milestones I think internally you are looking to achieve? I mean it's encouraging that you now give an EBITDA guidance for Group Digital Life but more color would be appreciated, that is second. The third thing is I think there were some reports in the press around the NetLink Trust potentially IPO, I just wanted to understand views on that and potentially what that - I mean if you were to divest 75%, what that money would be used for? Whether we can expect a special dividend or some capital management, thank you.

Ms Chua Sock Koong – Group CEO

Okay, let me just take this NetLink Trust first and then Moon can take your other questions on double the data, since he's the architect of the plan. Well when we set up the NetLink Trust, the agreement that we have with the regulator, IDA, is that we would sell down more than 75% of NetLink Trust and the deadline that has been agreed with the regulator is April 2018. So we still have a bit of time. We are starting the preparation but clearly it is premature at this time to talk about in what form the sell down is going to take, what the proceeds would be and how we would use the proceeds. We will keep the market informed, as the plans get firmed up. I'll pass over to Moon to talk about his mobile plans.

Mr Yuen Kuan Moon - CEO, Consumer Singapore

Thank you Sock Koong. The data upsizing, or double data, that we launched last month only kicked in later part of March. So the full impact of the plan has not been felt in the quarter that we're reporting the results. While that is the case, we are still expecting double data to have a different impact because it addresses different behavior of a customer. The double data plan has an impact of encouraging our customers to trade up to higher value plan or higher allowance plan. Because for same price of $5.90, surely the higher plan customers will get even more data than the lower size plan. So this will encourage more upward trading from our customers and it is also only offered to customers who are eligible to re-contract or buy a new plan. So existing customers who are not doing the re-contracting will continue to use their data the way they have used, and we expect them to continue, some of them to exceed their data bundle and therefore giving us that upside in data usage or data overage. The data overage on the ad hoc basis, for these customers are not permitted to any contract. So in one month they may be exceeding, on the second month another customer may be exceeding.

So for those who will take up data times two, are really those who are using a lot more and they're sure that on a regular basis they'll be exceeding. So we believe the two will coexist going forward and both will continue to drive up our data usage and data monetization.

Ms Chua Sock Koong – Group CEO

Samba, do you want to talk about Digital Life?.

Mr Samba Natarajan - CEO, Group Digital Life

Page 7 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Yes, thank you Suresh. On your question, I mean our view is that eventually for all our Digital Life companies we want to make them sizeable businesses with strong value creation potential, that's always been our objective. Some of these - all these businesses are in different stages, in terms of when they started and how they're scaling up. Amobee and the associative acquisitions, while we acquired them over the last two, three years, they've been in existence for five plus years. Therefore they're in the process of scaling up now. Whereas the other two companies, DataSpark and HOOQ, we started DataSpark only two years back and HOOQ about a year back, so they are still at the very early stages and over time scale. So that's how the portfolio approach is towards these three different businesses. We will then sometimes have key milestones by each of these businesses, as opposed to across and I think clearly we are seeing Amobee scale, whereas the other two will take some more time. That's why we give the EBITDA guidance to the portfolio, some will take time, some are already ahead. But that's our portfolio guidance for the EBITDA.

Suresh Mahadevan – UBS

Yes, thanks a lot for answering my question and all the best for FY2017.

Ms Sin Yang Fong – Vice President, IR

Thank you.

Operator

Our next question today comes from the line of Sachin Gupta from Nomura, your line is now open.

Sachin Gupta – Nomura

Thank you very much, I have three questions. Firstly, just on NetLink Trust once again, you've had a $0.5 billion loan repayment. I'm just wondering is it possible to talk about how did NLT fund this one? Is it external funding or it's from the cash flows? Because that's going to have an impact on the valuation I'd imagine. So that's one. Secondly on the guidance, the guidance for Amobee, you're only expecting mid-single digit growth for Amobee. Just wondering why be so conservative? Lastly for Optus, Allen, your mobile business obviously is starting to do pretty well. Just any thoughts on the rest of the businesses in Australia as well? Also the margins, were there any one-offs in the margins for the Australian business this quarter? Thank you.

Ms Chua Sock Koong – Group CEO

Okay, Cheng would you take the NLT loans issue and then Samba please explain Amobee, before we go back to Allen for Optus.

Ms Lim Cheng Cheng – Group CFO

Page 8 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Hi, good morning, hi Sachin. When it comes to the NLT you know that historically we had funded NLT with a portion of the unitholder loan. So the $510 million right now the repayment has been funded by external bank loans.

Mr Samba Natarajan - CEO, Group Digital Life

Yes, for Amobee, the digital advertising industry remains a fast paced industry with expected growth of more than 10%, so that's clear. Now this year, as we're scaling Amobee and seeing encouraging results, one of our key focus areas is to grow our Asia Pacific franchise and develop deep expertise in serving telcos as advertisers, using their data. As such, Amobee aims to have a significant portfolio of resources set aside this year to serve other entities in the Group, who will leverage Amobee's analytical insights to better serve the customers with relevant services. We are therefore setting aside some resources, as I said, for these Group entities. Overall Amobee's revenue is expected to grow in line with the market. But, excluding inter-co revenues, we expect that Amobee's growth will be mid- single digits and that is the basis of our guidance.

Mr Allen Lew – CEO, Consumer Australia

Sachin, it's Allen here. With regard to our other businesses, I will talk about our consumer fixed business and then I'll let Bill talk about Optus business and then I'll come back and talk about the margins question that you have. So in terms of our fixed businesses, I think our fixed business we are in consumer we are seeing strong revenue growth, mid-single digit. I think that's a reflection of our focus on fixed, to provide bundle service in the home for our mobile customers as well. I think increasingly we are seeing that in Australia, having good broadband speeds to the home is very important because people are consuming more and more digital content through their fixed broadband service. So we've invested a lot to make sure that the speed of our broadband services on our different technologies for fixed meet the needs, at least stream video adequately in high definition. So one of the reasons why we've been able to grow our fixed business is because our quality and our speed is there, it is vindicated in some place to a certain extent by Netflix which has rated us as the fastest fixed network in Australia for eight months consecutively. So I think we're focusing on both our fixed and mobile businesses, fixed to complement the mobile. I'll let Bill talk a little bit about Optus business and then I'll come back on the margin question.

Mr Bill Chang – CEO, Group Enterprise

Sachin, Bill here. So on the Australian fixed business specifically, there is sort of an industry consolidation of players, as you're aware, with some of the tier 2 players coming together. So essentially in that space, in the data and IP market, we are basically holding onto the customers. But because of this consolidation and then the ARPU erosions we're seeing a bit of erosions in the ARPU, whilst the customer base is pretty much intact. The growth in the managed services is offsetting a hardware resale that happened last year in Q4, where there were some hardware resale. But the managed services component is growing, that's a higher value component that we're focusing on, thank you.

Mr Allen Lew – CEO, Consumer Australia

Page 9 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Sachin, our EBITDA margin has grown from 31.7%, to 35.7% for the quarter. That's primarily because of MTR. MTR reduces the revenue, so the EBITDA margin has increased because of that and that's something that will carry on because that's ongoing.

Sachin Gupta – Nomura

Thanks Allen, I think on page 31 there's some mention of some write back of staff costs, so that's what I was trying to get at.

Mr Allen Lew – CEO, Consumer Australia

Murray, can you give some colour on that.

Mr Murray King – CFO, Consumer Australia

Yes, so Sachin, there are some write back of accruals associated with some fringe benefit tax. So essentially there were some over accruals at year end that we reversed and that was a one-off. But as Allen indicated, the majority of the margin uplift is due to the MTR reduction, which will be ongoing.

Sachin Gupta – Nomura

Okay, thanks for that.

Operator

Our next question today comes from the line of Foong Choong Chen from CIMB. Your line is now open.

Mr Choong Chen Foong – CIMB

Hi, thanks for the call. I've got three questions. Firstly, on the Singapore enterprise business, your revenues were up but your EBITDA was down. Were there any non-recurring costs in the quarter that affected the EBITDA or was profitability lower due to more competition? And what would be the outlook going forward for this segment?

Number two, on Optus the postpaid net adds was down for the second consecutive quarter. Despite the fact that you have had better network coverage and quality, that hasn’t really helped. Any thoughts on that would be useful.

And then thirdly - yes, those are my two questions, thank you.

Page 10 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Mr Bill Chang – CEO, Group Enterprise

Hi, Bill here. I'll talk about the enterprise in Singapore, the ICT services. If you look at it, the growth is 5% EBITDA. Now, the EBITDA impact is really because of forex translation from any US and UK currencies. The other issue is one-off sale, which is -- and minus all that it's really a stable environment. There's also an investment of staff costs in the building up capabilities in the new areas where we are pushing into cyber and into cloud, so the investment in staff cost is just building ahead in our push into new areas. But if you take all that, it's really a stable EBITDA based on the one-offs.

Mr Allen Lew – CEO, Consumer Australia

This is Allen here. The decline in our mobile overall was primarily because of movement of wholesale customers which are lower ARPU customers to one of our competitors. I think it's a point that I answered a little bit earlier, but if you look at our overall branded postpaid net adds we added 78,000 customers. Overall, postpaid handset customers grew by 69,000 for the quarter, excluding those wholesale customers that I talked about a bit earlier.

Mr Choong Chen Foong – CIMB

Okay, got it. Thank you so much.

Operator

Our next question today comes from the line of Arthur Pineda from Citigroup. Your line is now open.

Mr Arthur Pineda - Citigroup

Thanks for the opportunity. Three questions from me, please, and sorry to belabor the point here. Can you help us understand the GDL loss expansion guidance? Is it possible to get any clarity on the individual assets to see if they're actually progressing; from an EBITDA perspective where are the additional losses coming from?

Second question I had is with regard to the dividends. It seems to be the first time in recent memory where Singtel is actually paying out more than free cash flow levels. I'm wondering what the thought process was behind it. Is there now a greater willingness to sweat the balance sheet?

Third question is on housekeeping for Optus. Any color on the significant drop in selling and admin expenses in the first quarter? It seems to have driven up the margins. Thank you.

Ms Chua Sock Koong – Group CEO

Samba do you want to take the GDL guidance question? Page 11 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Mr Samba Natarajan - CEO, Group Digital Life

Yes, sure. As I said before, the GDL is a portfolio of separate companies and each company is at a different stage. Amobee is scaling up and its losses are going to reduce next year, while we are continuing to invest in other businesses, including particularly HOOQ over the course of this year. It's as a result of that combination that we have guided similarly to last year on GDL.

Mr Allen Lew – CEO, Consumer Australia

Murray, can you take the question on the…

Mr Murray King – CFO, Consumer Australia

Yes. There's a lower selling costs in Australia in the quarter consistent with the prior quarter that's due to the higher take-up of DRP plans. These plans have the effect of essentially taking the device costs and putting it on the balance sheet and amortizing it over the life of the customer contract term.

Ms Lim Cheng Cheng – Group CFO

With regards to the dividend, why is it above the free cash flow, if you look at our guidance, which is based on 60% or 75% of the underlying net profit. We've always guided that we want to ensure a very steady and sustainable dividend payments. There has been lumpiness of payments in our business; as you'll be aware, free cash flow is also a function affected by the multi-year investments we have in our CapEx in our business. So that's why you will see some lumpiness, experience some lumpiness in the free cash flow but overall this is what we are guiding to.

Mr Arthur Pineda - Citigroup

Thank you. Very clear, thank you.

Operator

Our next question today comes from the line of Wei Shi Wu from BNP Paribas. Your line is now open.

Ms Wei Shi Wu – BNP Paribas

Thank you. My first two questions relate to Optus. Firstly, I noted Allen's comments earlier about how the MTR reduces the revenue and therefore that drove the margin expansion in the fourth quarter. But I wanted to understand to what extent did the margin expansion also was a function of structural change in your revenue or your subscriber mix? Is there any way to quantify that?

Page 12 of 18 Q4 FY16 Earning Conference Call 12 May 2016

And then second question is with regard to the CapEx program for Optus. The comment earlier was that this is a three-year program so I just wanted to get a bit more detail around what exactly the investments are in.

Then finally a question on enterprise. Excluding Trustwave with the underlying enterprise, ICT business was up 5%. Is this a growth rate that management is happy with and if not what needs to happen for underlying growth to accelerate going forward? Thank you.

Mr Allen Lew – CEO, Consumer Australia

Allen here. I'll answer the question on the CapEx and where it is going and why and then I will leave Murray to answer your first question on what other stuff is driving the margin expansion.

I think in terms of the CapEx, the bulk of our CapEx is in mobile. The world is going mobile as far as the consumers, customers are concerned. We also see that as we basically move customers onto a 4G, the data usage goes up. And the third important thing is we believe that there's opportunity for us to expand into regional Australia because we believe that's an area where our market share is below the market share that we get in the capital cities. So I think the bulk of our investment goes towards that.

Then the second largest area of our investment this year is also going towards our billing and customer care systems where we are changing our system to something that's a bit more contemporary that allows us to provide customers that call us a whole-of-product view of the customer in terms of his fixed and mobile bundles.

So those are the major areas. One goes towards enhancing - the mobile one goes towards enhancing our competitive and our ARPU for customers with faster networks, and networks outside of the capital cities. The second one gives us productivity savings and gives us a better way of answering and serving our customers. I'll hand over to Murray.

Mr Murray King – CFO, Consumer Australia

In relation to the margin question, the predominant driver as we indicated in relation to quarter 4 was the mobile termination rate decline. I think there's obviously various elements that go into margin but if you look at our full year results, particularly for Consumer Australia, our margins are pretty consistent around the 32% year-on-year. So there's no real major changes or no major factors that are influencing margins beyond the quarter 4 MTAS impact.

Mr Bill Chang – CEO, Group Enterprise

For the enterprise segment and the forecast and all that, it's all in the outlook table and essentially the ICT revenues is to increase by low teens and cyber security revenue, we're guiding now to the $450 to $550 million range.

Ms Wei Shi Wu – BNP Paribas

To follow up on the last question, the low teens guidance is largely because of inclusion of Trustwave, isn’t it? Page 13 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Mr Bill Chang – CEO, Group Enterprise

Yes, inclusion of Trustwave but also the inherent growth in ICT services business to augment that. So Trustwave is just a component of that. Beyond Trustwave there is also the organic business that has to grow.

Ms Wei Shi Wu – BNP Paribas

Got it, thank you.

Operator

Our next question today comes from the line of Prem Jearajasingam from Macquarie Securities. Your line is now open.

Mr Prem Jearajasingam – Macquarie Bank

Thank you for the opportunity. Three questions from me, please. First of all, looking at the experience that you've had now with the double data plans and the SIM-only plans, what are your thoughts around the potential threat of a fourth player? Have we largely defused that threat in your minds? That's one.

Number two, looking at the pay TV business, it does look like Singapore is experiencing cord-cutting. We've seen a decline in pay TV subs from both Singtel and StarHub. Do you think that this has any significant implications for the business, maybe even from a cost standpoint, if you are able to cut your content cost?

And finally, if you could just remind us what your views around the balance sheet gearing, what do you think over a three-to-five-year view would be a comfortable net debt to EBITDA ratio, just in helping us understand your use of cash going forward. Thank you very much.

Ms Chua Sock Koong – Group CEO

Yes. Moon will take those questions.

Mr Yuen Kuan Moon - CEO, Consumer Singapore

Yes, thank you. The double-data plan has just only been introduced one month ago, so it's still very early days so of course we are seeing very good traction and customers are saying that they like it and we've seen a high take-up rate on that. We will always look at what is the market asking for and respond with all the various options of creative packaging to allow our customers to have the flexibility of buying different data, different plans. This is regardless whether there's a new operator coming on board or not. Page 14 of 18 Q4 FY16 Earning Conference Call 12 May 2016

I think the market has always been very innovative and Singtel will always want to lead by offering our customers more choices and giving them different plans. Two years ago we offered the Easy Mobile plan that is a purely online plan that customers can customize their plan on a monthly basis. So we will continue to push ourselves and innovate more to give our customers options. I think it's premature to talk about a fourth operator when we have not seen whether the coming spectrum auction is going to appear with a fourth operator or not.

Let me move on to the pay TV business, and I think you can see that the market has shifted in the way our consumers have started to view their content. It's no longer only through the traditional pay TV platform where they're getting the content onto the setup box through the TV. So with really good fiber network as well as a very good Singtel 4G network we are seeing our customers now enjoying their content via different streams and delivered through different methods. And therefore we are also ensuring that we acquire content and distribute them in a manner that suits their new and current viewing behaviors.

So recently we have introduced bundling with Netflix to allow our customers to offer their choice of watching content on a different platform as well, including on the set top box and broadband as well as mobile. Similarly, we have cut a deal with Viu which we are bringing premium Korean content into Singapore later this year. So these are some of the things that we are doing to ensure that we keep up with the market trends and the technology trends where consumers are looking at different ways of viewing their content.

Ms Chua Sock Koong – Group CEO

Cheng, can you take the balance sheet question?

Ms Lim Cheng Cheng – Group CFO

Yes, okay. As you can see from our balance sheet, it remains to be one of the strongest, and we have also said that we'll maintain investment credit rating for the Company. If you also look at our net debt to EBITDA, we're still very strong at about 1.17. So obviously we don't guide on the stage of funds on balance sheet over the next three to five years, but you can see that we have always been consistent, (1) investing into our core business and (2) you also read that we have subscribed for the rights in BTL, upstaking our associates, the terms and the timing must be correct and lastly we must have a good feeling that these are opportunities that augments our business and make sense. We actually do M&A like the Trustwave deal that we did.

Mr Prem Jearajasingam – Macquarie Bank

Perfect, thank you very much.

Operator

Our next question today comes from the line of Raymond Tong from Goldman Sachs. Your line is now open.

Page 15 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Mr Raymond Tong – Goldman Sachs

Morning, thank you. Just had a couple of questions for Allen. Allen, you mentioned in the media release today that you're on track to achieve your three year targets. Just wondering whether you could maybe elaborate on what this is and maybe get a bit more color on this? Secondly, you recently announced I suppose the pricing for EPL. Can you maybe talk about the market opportunity here, how many subs do you think you can attract or is watching EPL in Australia? Thank you.

Mr Allen Lew – CEO, Consumer Australia

Okay. First with regard to the three year targets, I think we obviously are making big investments in our mobile and our fixed networks here in Australia, so the three year targets are basically cash flow, profitability and revenue market share targets. So I think these are some things that the team in Optus work towards and that we commit to as a team, in order that we can justify the sort of investments that we have been making in this market. It's not something that we share publicly, so I think you know, it's something that we work internally and when I say we are on track, you can see from our external results that we have certainly gone from a stage where we were not growing our share to one we are growing our share and we're growing our ARPU for our respective products.

The second important thing on EPL, you know as I mentioned earlier, this market is a very competitive market and the ability to get unique, something unique to bundle together with your broadband service, it certainly allows us to differentiate and have distinctiveness in the market. So I think what EPL does is it gives us an opportunity to build a strong franchise around that particular group of people that watch that which is quite a significant number. I can't share that number with you because of confidentiality but we certainly believe that going ahead with our mobile business and our fixed business in the next 12 to 18 months, we will have something that no one else can replicate in this market and we will use that to the fullest and we will see the results when we announce them on a quarterly basis.

Raymond Tong – Goldman Sachs

Okay thank you and just had a final question. Has there been a shift in your fixed broadband strategy? It seems like you're growing the NBN subscribers but also starting to grow I think quarter-on-quarter the off-net DSL subscriber base again. Is that something that you sort of re-launched to maybe sort of grab some share ahead of the NBN coming into the regional areas?

Allen Lew – CEO, Consumer Australia

Yes that's certainly one of the reasons because I think obviously we know the NBN rollout and obviously getting in front of the customer first before NBN has an advantage, but I think overall if you look at our consumer strategy in Australia is very much about mobile. Fixed complements mobile because it allows us to provide a convergent product and when you provide a convergent product and you have content that goes both at home and on different devices when you're on the move, it allows us to get that much better experience for customers. On a very practical, financial and commercial basis, bundling a customer results in lower churn for us as well.

Page 16 of 18 Q4 FY16 Earning Conference Call 12 May 2016

So I think for us the fixed business is important to have a competitive product, have a product that has the speed that meets customer needs, but at the end of the day, fixed to us in the consumer business is one that complements our core mobile business here in Australia, in consumer Australia.

Raymond Tong – Goldman Sachs

Great, thanks Allen.

Operator

Our next question today come from the line of Gopa Kumar from Nomura. Your line is now open.

Mr Gopa Kumar – Nomura

Thank you. I have two questions please. In your guidance for dividends from associates for this year, do you factor in any potential reduction in dividends from AIS? Secondly, sorry not sure if I missed this -- the Enterprise earnings appear a bit weak and the Group Enterprise EBITDA has been trending down for the last few quarters. What's the reason behind this and what's your outlook for the earnings in this business going forward? Thank you.

Ms Chua Sock Koong – Group CEO

Cheng do you want to take the dividends question?

Ms Lim Cheng Cheng – Group CFO

Sure, I think with regards to the associates and I think you highlighted AIS, AIS has also said in their guidance that they will maintain 100% payout on their net profit and I also want to highlight that we have different year ends, so there is a timing lag in the payment back.

Mr Bill Chang – CEO, Group Enterprise

On the Group Enterprise EBITDA, essentially we are looking at investing in the growth engines and building up a lot of capabilities into those areas whilst managing the core business. So driving the revenues growth, it's a key whilst investing now to build into the future. Thank you.

Gopa Kumar – Nomura

Thank you.

Page 17 of 18 Q4 FY16 Earning Conference Call 12 May 2016

Operator

Our next question today comes from the line of Roshan Raj from Merrill Lynch. Your line is now open.

Roshan Raj - Merrill Lynch

Hi thanks. Two more questions. First, in terms of the trends we have seen on the double data plans in Singapore, you share with us if the number of customers topping up on their existing plans exceeds those downgrading from higher data plans? Some color there would be helpful. Second is, Trustwave's margin outlook over the medium term, some color there would be helpful. Thank you.

Mr Yuen Kuan Moon - CEO, Consumer Singapore

Yes. With regards to the data times two plan, I think it is still very early days but the initial indication is it's tracking very well according to our business plan. We are not seeing a lot of trading down as I explained earlier on. The scheme is designed in a way to encourage up trading because the higher plan you have, that is the more data allowance you get and you're paying at the same $5.90, so we don't expect to see a lot more down trading. We expect momentum to be strong because the early days have indicated that the customers are liking it and taking it up.

Mr Bill Chang – CEO, Group Enterprise

The cyber security business is a growth business so at the moment we're guiding by revenues. Essentially what we see in a steady state -- it's not just Trustwave but the combined business, it's in the mid-teens, for managed services, security services. Yes.

Roshan Raj - Merrill Lynch

Thank you.

Ms Sin Yang Fong – Vice President, IR

Thank you very much for your interest in our call. Should you have further questions on today's results or anything else, please approach the IR team in Singapore or in . So on behalf of everyone in Singtel, thank you very much for the call and we will talk again next quarter. Bye.

Operator

Ladies and gentlemen, that does conclude the conference for today. We thank you for your participation. You may all now disconnect.

End of Transcript

Page 18 of 18