Singapore Telecommunications Limited And Subsidiary Companies MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS FOR THE SECOND HALF AND FINANCIAL YEAR ENDED 31 MARCH 2021 The financial statements for the year ended, and as at, 31 March 2021 are audited. Numbers in all tables may not exactly add due to rounding. For all pages, "@" denotes more than +/- 500%, "*" denotes less than +/- S$0.5 million or A$0.5 million and “**” denotes less than +/- 0.05%, unless otherwise indicated. For all tables, a negative sign for year-on-year change denotes a decrease in operating revenue, expense, gain or loss. Singapore Telecommunications Ltd And Subsidiary Companies Table Of Contents Section 1 : Group Pg Performance At A Glance………………….………………………………………………………………………………………..1 Financial Highlights……...……………………………………………………………………………………………..2 Business Highlights……………………………………………..…...………………………………………..3 Group Summary Income Statement……………………………………………………………………………………………………..4 Outlook For The Next Financial Year Ending 31 March 2022………………………………………………………………….…...……………………..………..5 Final Dividend……………………..……...……………………………….…...……………………..………..5 Review Of Group Operating Performance……………………………………………………………………………………………………..5 Net Finance Expense……………………………………………………………………………………………………..8 Exceptional Items (Post-Tax)……………………………………………………………………………………………………..9 Tax Expense……………………………………………………………………………………………………..11 Summary Statements Of Financial Position ……………………………………………………………………………………………12 Capital Management……………………………………………………………………………………………13 Cash Flow …………………………………………………..………………....…………....………………. 14 Section 2 : Singapore Consumer Summary Income Statement………...………………………………………………………………………………..16 Financial Performance…..……………………………………………………………………………………………………………..17 Business Highlights….................................................................................................................................18 Section 3 : Australia Consumer Summary Income Statement………...………………………………………………………………………………..19 Financial Performance…..……………………………………………………………………………………………………………..20 Business Highlights…......................................................................................................................................21 Section 4 : Group Enterprise Summary Income Statement………...………………………………………………………………………………..23 Financial Performance …..……………………………………………………………………………………………………………..26 Business Highlights….......................................................................................................................................26 Supplementary Information………..………………………………………………………………………………..27 Section 5 : Group Digital Life Summary Income Statement………...………………………………………………………………………………..30 Financial Performance …..……………………………………………………………………………………………………………..31 Section 6 : International Group Summary Income Statement………...………………………………………………………………………………..32 Financial Performance And Business Highlights …..……………………………………………………………………………………………………………..33 Section 7 : Associates/ Joint Ventures Share Of Results Of Associates/ Joint Ventures………...………………………………………………………………………………..35 Financial Performance and Business Highlights …..……………………………………………………………………………………………………………..37 Key Operational Data………...………………………………………………………………………………..43 Singapore Telecommunications Ltd And Subsidiary Companies Table Of Contents (continued) Section 8 : Product Information Pg Singapore Product Drivers………………….………………………………………………………………………………………..44 Australia Product Drivers……...……………………………………………………………………………………………..46 Group Enterprise Drivers……………………………………………..…...………………………………………..47 Section 9 : Glossary………………….………………………………………………………………………………………..48 Appendix 1 : Group Operating Revenue And Expenses Appendix 2 : Business Segment Results Appendix 3 : Group Enterprise Summary Income Statements By Region Appendix 4 : Optus Financials In Australian Dollars Appendix 5 : Group Statements Of Financial Position Appendix 6 : Group Cash Flow Statement Appendix 7 : Currency Risk Management And Other Matters Appendix 8 : Proforma Information And Mobile Customer Base Singapore Telecommunications Ltd And Subsidiary Companies Page 1 SECTION 1 : GROUP PERFORMANCE AT A GLANCE Financial Year Half Year Mar 21 Mar 20 Mar 19 Mar 21 Sep 20 Mar 20 Sep 19 S$ m S$ m S$ m S$ m S$ m S$ m S$ m Operating Highlights Group mobile customer base (million) (1) 744 705 692 744 716 705 711 Mobile customer market share (%) - Singapore 51.0 50.4 49.9 51.0 51.6 50.4 49.8 - Australia (2) 31.4 32.0 NA 31.4 31.7 32.0 NA - Airtel India 29.8 28.4 28.0 29.8 28.4 28.4 27.7 - Telkomsel 58.7 59.3 60.9 58.7 59.2 59.3 59.9 - AIS 46.0 45.2 45.2 46.0 45.6 45.2 45.1 - Globe 52.6 55.0 56.6 52.6 51.9 55.0 57.7 Group Financials (S$ million) Operating revenue 15,644 16,542 17,372 8,219 7,425 8,278 8,265 EBITDA 3,832 4,541 4,692 1,928 1,903 2,196 2,345 Share of associates' pre-tax profits 1,798 1,743 1,536 913 885 941 801 EBIT 2,945 3,704 4,006 1,464 1,481 1,843 1,861 Underlying net profit 1,733 2,457 2,825 896 837 1,145 1,312 Net profit/ (loss) 554 1,075 3,095 88 466 1,202 (127) Free cash flow 3,395 3,781 3,650 1,689 1,705 1,788 1,993 Cash capex 2,214 2,037 1,718 1,118 1,096 1,134 903 Digitalisation and Cost Savings Digital revenue (3) as % of total revenue 16 15 14 17 15 16 15 As a % of total revenue - Direct costs (4) 50 48 47 52 48 49 47 - Indirect costs (4) 27 26 28 26 28 25 26 Cost savings (S$ million) 386 444 541 186 200 181 263 Key Financial Indicators Proportionate EBITDA from outside Singapore (%) 78 79 76 79 77 79 78 Return on invested capital (%) (5) 5.0 6.4 7.7 - - - - Return on equity (%) (5) 2.1 3.8 10.4 - - - - “NA” denotes not available. Notes: (1) Comprised the Group’s mobile customers in the markets of Singapore, Australia and that of Airtel, Telkomsel, Globe and AIS. (2) Based on latest available market share at the end of December or June. (3) Comprised revenues from Group Digital Life and digital services across consumer and enterprise businesses. (4) Direct costs comprised mainly cost of sales, traffic expenses and other expenses directly attributable to revenue earned. Indirect costs refer to expenses not directly attributable to revenue earned. (5) Only applicable for full financial year. Singapore Telecommunications Ltd And Subsidiary Companies Page 2 SECTION 1 : GROUP FINANCIAL HIGHLIGHTS FOR THE SECOND HALF YEAR ENDED 31 MARCH 2021 Operating revenue was stable and EBITDA decreased 12%. In constant currency terms1, operating revenue fell 4.8% and EBITDA was down 16% primarily due to lower NBN migration and legacy carriage revenues. Associates’ post-tax profit contributions fell 5.1% on profit declines from Telkomsel and Globe, partly mitigated by improved operational performance from Airtel. Underlying net profit was down 22%. Net exceptional losses were recorded due mainly to non-cash impairment charges and provisions, compared to a net exceptional gain in last corresponding period. Free cash flow was down 5.5% on lower operating cash flow. FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 Operating revenue fell 5.4% and EBITDA was down 16% in a challenging year marked by the COVID-19 pandemic. Associates’ post-tax profit contributions were stable as improved operational performance from Airtel offset profit declines from Telkomsel, AIS and Globe. Underlying net profit was down 30%. Net profit fell 49% after including net exceptional losses. Free cash flow declined 10% on lower operating cash flow and higher capital expenditure. 1 Assuming constant exchange rates for the Australian Dollar, United States Dollar and/or regional currencies (Indian Rupee, Indonesian Rupiah, Philippine Peso and Thai Baht) from the corresponding second half year ended 31 March 2020. Singapore Telecommunications Ltd And Subsidiary Companies Page 3 SECTION 1 : GROUP BUSINESS HIGHLIGHTS The Group’s combined mobile customer base reached 744 million as at 31 March 2021, up 27 million or 3.8% from 30 September 2020. The scale provided a strong platform for the Group to drive usage of mobile data services and expand into digital services, including content, mobile financial and gaming services. The Group achieved cost savings of S$186 million during the second half year to reach S$386 million for the financial year, with good progress made in its digitalisation and cost transformation programmes. Singapore Telecommunications Ltd And Subsidiary Companies Page 4 SECTION 1 : GROUP GROUP SUMMARY INCOME STATEMENT For The Second Half And Financial Year Ended 31 March 2021 Second HalfYOY Year YOY 31 Mar Chge 31 Mar Chge 2021 2020 Chge in cc (1) 2021 2020 Chge in cc (1) S$ m S$ m % % S$ m S$ m % % Operating revenue 8,219 8,278 -0.7 -4.8 15,644 16,542 -5.4 -7.7 Operating expenses (6,360) (6,162) 3.2 -1.0 (11,954) (12,180) -1.9 -4.2 1,860 2,116 -12.1 -16.0 3,690 4,363 -15.4 -17.5 Other income 69 80 -14.4 -19.1 142 179 -20.9 -23.0 EBITDA 1,928 2,196 -12.2 -16.1 3,832 4,541 -15.6 -17.7 - EBITDA margin 23.5% 26.5% 24.5% 27.5% Share of associates' pre-tax profits 913 941 -3.0 -1.2 1,798 1,743 3.2 4.0 EBITDA and share of associates' pre-tax profits 2,841 3,137 -9.4 -11.6 5,630 6,284 -10.4 -11.7 Depreciation (1,192) (1,118) 6.6 0.7 (2,324) (2,229) 4.3 1.1 Amortisation of intangibles (186) (177) 5.1 0.6 (361) (352) 2.5 -0.2 (1,377) (1,295) 6.4 0.6 (2,685) (2,580) 4.0 0.9 EBIT 1,464 1,843 -20.6 -20.2 2,945 3,704 -20.5 -20.5 Net finance expense (191) (249) -23.3 -25.8 (395) (282) 40.2 37.8 Profit before exceptional items and tax 1,273 1,594 -20.1 -19.4 2,550 3,422 -25.5 -25.3 Taxation (373) (459) -18.7 -17.6