Connecting Generations Through Innovation
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SINGAPORE TELECOMMUNICA SINGAPORE T ION S L IMI T ED Connecting Generations ANNUAL Through REPOR Innovation T 2010/2011 T SINGAPORE TELECOMMUNICATIONS LIMITED ANNUAL REPORT 2010/2011 WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb Our drive for creativity and innovation has been the cornerstone of our business since our beginnings as a homegrown telephone company. Today, we are the leading communications group in Asia with operations and investments throughout the region. In our quest to become Asia’s best multimedia and ICT solutions provider, we are leaping beyond traditional boundaries to empower businesses with the latest technology and inspire individuals to stay connected in a borderless world. WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb Group at a Glance SingTel is Asia’s leading communications group, providing a diverse range of innovative services including fixed, mobile, data, internet, ICT and TV. LEAD AND SHAPE IN SINGAPORE In Singapore, SingTel has more than 130 years of operating experience and has played an integral part in the development of the country as a major communications hub in the region. As the market leader, we continue to lead and shape the digital consumer market in Singapore and the enterprise ICT market across Asia. WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb GROW IN COLLABOratE AUstralIA acrOSS THE REGION CONTENTS Optus is an Australian SingTel has investments 1 Key Figures leader in integrated in mobile operators in 8 Chairman’s Statement telecommunications, Bangladesh, India, Indonesia, 11 In Dialogue with GCEO 14 Board of Directors delivering cutting-edge Pakistan, the Philippines, 18 Members of the communications, information and Thailand. We are more Management Committee technology and entertainment than a financial investor. 21 Organisation Structure services. We enjoy a strong As part of a larger group, 22 Key Awards and Accolades 24 Operating and Financial Review No. 2 position in the mobile the associates share 48 Corporate Social Responsibility and fixed-line markets. As experiences and insights 52 Our People the challenger brand, Optus with one another as they 56 Corporate Governance has driven competition and navigate challenges, and take 72 Investor Relations led the way in delivering advantage of opportunities 74 Risk Management Philosophy and Approach innovative products and in their own markets. 80 Financial Statements services to customers. 195 Interested Person Transactions 196 Shareholder Information 198 Corporate Information 199 SingTel Contact Points WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb Key Figures OPERATING REVENUE (S$ m) Operating revenue grew on the back of strong mobile FY10/11 18,071 revenue growth from both FY09/10 16,871 +7% the Singapore and Australia operations, further boosted by the stronger Australian Dollar. UNDERLYING NET PROFIT (S$ m) Underlying net profit declined as a result of lower associates’ FY10/11 3,800 contributions, including Bharti FY09/10 3,910 -3% Africa’s losses and related acquisition financing costs, as well as investments in strategic initiatives. FREE CASH FLOW (S$ m) Free cash flow grew to a FY10/11 4,038 record S$4.04 billion, with FY09/10 3,406 higher cash flows from all +19% three businesses. (1) RETURN ON INVESTED CAPITAL (ROIC) (%) FY10/11 17.6 ROIC declined due to lower Group net profit and higher FY09/10 18.9 -1.3% average capital. points PROPORTIONATE EBITDA Through its investments in overseas markets, the Group has diversified its earnings base. Overseas operations contributed 76 per cent to proportionate Singapore 24% EBITDA, up 2 percentage Australia 30% points from a year ago. Regional Mobile Associates 45% Others 1% Note: (1) ROIC is the ratio of earnings before interest and tax (EBIT) to average net capitalisation, which is the aggregate of net debt, shareholders’ funds and minority interests. ANNUAL REPORT 2010/2011 1 WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb Covering more than 2 billion people across Asia and Africa. 2 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb We are a long term strategic investor in these regional mobile operators – AIS (Thailand), Globe (the Philippines), PBTL (Bangladesh), Telkomsel (Indonesia) and Warid (Pakistan). Through Bharti (India), we also have significant presence in 16 African countries and Sri Lanka. (1) Burkina Faso, Chad, Democratic Republic of Congo, Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia ANNUAL REPORT 2010/2011 3 WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb SingTel has transformed from a traditional telecoms operator to a multimedia and integrated infocomm technology solutions company. 4 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb We are making significant strides in innovation to improve customer experience and enhance their lifestyles and businesses. ANNUAL REPORT 2010/2011 5 WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb It’s about touching lives. 6 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb We serve our customers with passion and appeal to their compassion. We galvanise our staff into action with a common vision. Together, we aspire to make a difference to the lives of the wider community we interact with. ANNUAL REPORT 2010/2011 7 WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb Chairman’s Statement Dear Shareholders, FY10/11 was a year of transformation for the SingTel Group. In Singapore, we cemented our position as the leader in communications services and grew to become a significant multimedia operator, offering differentiated innovative content and applications. In Australia, Optus’ mobile business continued to gain strength. Optus also celebrated the 25th anniversary of its satellite business and, in August, announced plans to launch its 10th satellite in 2013. We are the only full service telco in Australia that can harness the geographical reach of satellite communications for the benefit of our customers. As a Group, we crossed the 400 million mobile customer mark, with the inclusion of customers from Bharti’s 16 African operations, which Bharti successfully acquired in June 2010. With this milestone acquisition, the Group now has a footprint covering a population of more than 2 billion. Another significant event was the Next Generation National Broadband Network going live in Singapore. Leveraging the high speeds, we introduced innovative fibre services and differentiated ourselves from our competitors. In Australia, while the National Broadband Network (NBN) is still taking shape, we expect that it will level the playing field for operators in the country’s fixed-line market. Our knowledge and experience in Singapore will help Optus compete more effectively when NBN is rolled out in Australia. Beyond our focus on business and financial performance, we are also committed to our roles as responsible corporate citizens. We continued to contribute and raise funds for charities, victims of natural disasters and other social causes in the communities 8 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES WorldReginfo - e59331a2-80d6-454b-99db-5dbab9af98fb We are proactively we operate in. Natural disasters struck Australia we firmly believe that these strategic initiatives and we responded swiftly to render support. are critical to sustain SingTel’s future growth. responding to and Besides making donations, Optus worked shaping some of these tirelessly to restore services and distributed Our business in Australia gained revenue handsets and prepaid SIMs, to allow people market share and achieved strong EBITDA industry trends by to contact their loved ones. I am extremely growth and cashflow generation. Optus added innovating. We are in heartened by the way we responded. 582,000 postpaid mobile customers during a position to leverage the year, through differentiated mobile offerings, Continuing to delight our customers dedicated focus on customer experience our unique strengths and enhanced network coverage which now of scale, customer Mobile communications have become more covers 97 per cent of the Australian population than a communication tool. Customers are for both voice and data. knowledge and trusted increasingly finding new uses for their mobile relationships to devices, for recreational, social and transactional In the region, our associates have been investing purposes. Across Singapore and Australia, in mobile broadband - an area which holds deliver relevant and we are capturing and driving growth in this significant growth potential in the emerging personalised services area through a complementary focus of offering markets. However, a revival of competitive the latest smartphones and innovative pressures affected the financial performance to customers. applications, coupled with attractive mobile data of our associates, in particular, Bharti, Globe price plans. and Telkomsel, as they defended their market position. Bharti’s expansion into Africa also In Singapore, we achieved a record increase incurred significant financing costs and reduced of 156,000 new postpaid mobile customers. its earnings contribution to the Group. Our pay TV service, mio TV, made major strides in customer growth and, in May 2011, Nonetheless, we ended the financial year on crossed the 300,000 mark. We also became a strong