S ingapore Telecommunications Limited Telecommunications ingapore Singapore Telecommunications Limited (CRN:199201624D) SUPERCHARGING 31 Exeter Road, Comcentre Singapore 239732 THE FUTURE T +65 6838 3388 www.singtel.com Copyright © 2020 Annual Report 2020 Annual Report 2020 Annual Report Group Enterprise 49 Group Consumer 35 Credit: Orchard Road Business Association Group Governance and Digital Life Sustainability 55 63 Supercharging the Future 2020 will go down in history as the year COVID-19 put a halt to daily life as we know it. With staying home and social distancing highlighting the need for digital technology to keep us all connected, it will also be the year remembered for profound changes in communication behaviour. The arrival of 5G will not only prove timely in addressing these changes, it will also supercharge the future by reconfiguring how technology, data and services are deployed to meet consumers’ needs, transforming industries and cities in the process. As a leader in communications technology, our goal is to keep innovating to improve the lives of our customers and stakeholders. We are proud to be advancing the 5G charge and committed to creating a brighter digital future for all. Table of Contents OVERVIEW PERFORMANCE An overview of our businesses, Our financial performance our performance, key achievements and value created, as well as our 118 Group Five-year strategy moving forward Financial Summary 122 Group Value Added Statements 01 Financial Highlights 123 Management Discussion 03 FY 2020 Achievements and Analysis 05 Chairman’s Message 07 GCEO Review 09 Who We Are FINANCIALS 11 Our Businesses and Strategy Audited financial statements 13 The Value We Create 15 Our Response to COVID-19 133 Directors’ Statement 19 A 5G Future 144 Independent Auditors’ Report 22 Board of Directors 152 Consolidated Income Statement 27 Organisation Structure 153 Consolidated Statement of 28 Management Committee Comprehensive Income 34 Senior Management 154 Statements of Financial Position 155 Statements of Changes in Equity 159 Consolidated Statement of BUSINESS REVIEWS Cash Flows Insights into each of our business units 161 Notes to the Financial Statements 35 Group Consumer 49 Group Enterprise ADDITIONAL INFORMATION 55 Group Digital Life Our shareholders, transactions 61 Key Awards and Accolades with interested persons and other corporate information GOVERNANCE AND 260 Interested Person Transactions SUSTAINABILITY 261 Additional Information on Our corporate governance, risk Directors Seeking Re-election management and sustainability efforts 269 Shareholder Information 271 Corporate Information 63 Governance and 272 Contact Points Sustainability Philosophy 65 Corporate Governance 97 Investor Relations 99 Risk Management Philosophy and Approach 111 Sustainability Scan here to view the Singtel Annual Report 2020 online. Financial Highlights(1) FY 2020 FY 2019 OPERATING REVENUE S$16,542m S$17,372m EBITDA S$4,541m S$4,692m EBIT S$3,704m S$4,006m UNDERLYING NET PROFIT S$2,457m S$2,825m NET PROFIT S$1,075m(2) S$3,095m RETURN ON INVESTED CAPITAL(3) 6.4% 7.7% RETURN ON (2) EQUITY 3.8% 10.4% Notes: (1) Based on Singapore Financial Reporting Standards (International) (SFRS(I)). Includes the effects from adoption of SFRS(I) 16, Leases, from 1 April 2019 on a prospective basis. (2) Includes the Group’s share of Airtel’s net exceptional loss of S$1.8 billion mainly for regulatory costs. (3) Return on invested capital is defined as EBIT (post-tax) divided by average capital. 1 OVERVIEW EBIT AND SHARE OF ASSOCIATES’ PRE-TAX PROFITS Contribution by Business BUSINESS REVIEWS Australia Consumer 24% Group Enterprise 23% (4) Singapore Consumer 13% S$3,704m AND GOVERNANCE SUSTAINABILITY Group Digital Life -4% Share of associates’ pre-tax profits 47% OPERATING REVENUE SHAREHOLDER PAYOUT Contribution by Product and Service Dividend Per Share (S¢) PERFORMANCE Mobile 2020 12.25 Service Data and 29% Internet 22% 2019 17.5 FINANCIALS For the financial year ended 31 March 2020, the Board has recommended a final ordinary dividend of 5.45 S$16,542m Singapore cents a share. Together with the interim dividend of 6.8 Singapore cents, the total ordinary dividend for the year is 12.25 Singapore cents, compared to 17.5 Singapore cents last year. Sale of INFORMATION ADDITIONAL Equipment ICT and Leasing The reduction in dividend payout is prudent to conserve 18% 17% financial headroom to cope with uncertainties in the current COVID-19 operating environment and the Others(5) Digital capacity to invest in 5G. 7% Businesses 7% Notes: (4) Includes costs of S$152 million from International Group and Corporate. (5) Includes mainly Fixed Voice and Pay Television. Singapore Telecommunications Limited | Annual Report 2020 2 FY 2020 Achievements We are constantly innovating — whether it is investing in next-generation 5G networks and emerging technologies or enhancing our digital capabilities — we want to bring our customers best-in-class products and services. MADE STRIDES IN 5G ACROSS THE REGION • Singtel submitted its winning bid to operate a 5G network in Singapore. • Optus expanded 5G coverage to over 800 fixed wireless sites in Australia. • Globe launched the Philippines’ first fixed wireless 5G network. • AIS debuted Thailand’s first commercial5 G service. ENHANCED MOBILE FINANCIAL SERVICES • Expanded Singtel’s mobile wallet Dash’s offerings and cross-border mobile payment alliance VIA to include Japan. • Telkomsel’s TCash integrated with Indonesia’s LinkAja! app, a digital payment platform that also includes the e-wallets of several banks. INNOVATED NEW PRODUCTS AND SERVICES • Singtel launched StepUp, a digital wellness platform that rewards customers with local mobile data with every step they take. • Optus introduced greater choice and flexibility with its customisable plans and no lock-in contracts. • Telkomsel launched Indonesia’s first digital prepaid mobile service by.U. EXPANDED REGIONAL GAMING INITIATIVE • Joined hands with SK Telecom and AIS to launch regional gaming joint venture and develop new gaming-related revenue streams. • Scaled up Singtel’s PVP Esports initiative, taking both PVP Esports Corporate and Campus Championships regional. 3 OVERVIEW DEEPENED CYBER SECURITY CAPABILITIES BUSINESS REVIEWS • Launched Trustwave’s Fusion platform, a cloud-based platform that provides enterprises with real-time visibility of cyber threats and equips them with the ability to respond swiftly. GOVERNANCE AND GOVERNANCE SUSTAINABILITY INVESTED IN AUSTRALIA-NEW ZEALAND-US SOUTHERN CROSS UnUnititeded SUBMARINE CABLE SYSTEM CABLE NETWORK HHawaiiawaiii StStatesates KKiribatiiribati • Enhanced regional connectivity with consortium TTookkkelauelelau partners through Southern Cross NEXT submarine cable, a new data super-highway between Australia, New AuAustrastralilia FiFijiji Zealand and the US that will be completed in 2022. NNeewwZZeeaallaanndd PERFORMANCE LISTED AIRTEL AFRICA • Airtel successfully listed Airtel Africa, the second largest mobile operator in Africa, on the London Stock Exchange and Nigeria Stock Exchange, raising US$750 million. FINANCIALS RECOGNISED FOR COMMITMENT TO DIVERSITY AND SUSTAINABILITY ADDITIONAL INFORMATION ADDITIONAL • Won the President’s Award for the Environment 2019, Singapore’s highest environmental accolade. • Included in the Bloomberg Gender-Equality Index for the second year running. • Singtel was the only Asian telco ranked among Corporate Knights’ 2020 Global 100 Most Sustainable Corporations. Singapore Telecommunications Limited | Annual Report 2020 4 Chairman’s Message Dear Shareholders, This has proven to be the most AIRTEL PERFORMANCE years to move retail and enterprise challenging year in Singtel’s RECOVERING customers to digital channels and history, as we faced a convergence The Indian telecoms market has services, we should emerge from this of intensified competition across moved past the price war and crisis better positioned overall. our businesses, adverse regulatory consolidation of the last two years and court rulings in India and an into an improved phase of market WHERE WE STAND unprecedented public health crisis repair. Airtel has begun recording The uncertainties of COVID-19 make that has sent economies around gains in pricing and market it hard to forecast the year ahead the world reeling. Against this share in a three-player market, and for this reason, Singtel did not backdrop, our net profit for FY2020 significantly improving last year’s issue any guidance at the financial declined 65% to S$1.08 billion. performance and carrying this year end. The Group has ensured Excluding exceptionals, a key item momentum into the new year. ample liquidity and debt facilities being Airtel’s regulatory charges, During the year, it successfully to cope with the unpredictability of underlying net profit would have raised capital and is well positioned the current operating environment dropped 13% to S$2.46 billion. to compete and invest as India as well as commence our investment transitions to a digital economy. in the rollout of 5G where the returns COMPETITION AND INDUSTRY are expected to be mid to long term HEADWINDS As a growth rather than a yield in nature as applications emerge. Intensified competition across stock, Airtel does not contribute Considering the implications of markets is eroding industry profit materially to Singtel’s cash flow by COVID-19 and future investment pools. In our consumer business, way of dividends. The market value needs, the Board recommended a competition has driven up data of our