Singapore Telecommunications (Z74) H1 2023 earnings summary

Executive summary

• H1 FY23 net profit rose 23% to S$1.17b, including a net exceptional gain from partially divesting a 3.3% Airtel stake; underlying net profit increased 2% to S$1.005b.

• Core telco margins improved with roaming recovery as travel resumed; NCS added S$1.3b in bookings and ended the half with a S$3.5b order book.

• Net debt fell S$3.4b, nearly a third YoY, supporting balance-sheet resilience and shareholder distributions.

Financial highlights

• Operating revenue was S$7.259b, down 5% reported and 3% at constant currency; EBITDA was S$1.878b, down 3% reported and 0.3% constant currency.

• EBIT excluding associates was S$579m, up 1% reported and 3% constant currency; underlying net profit rose 2% reported and 5% constant currency.

• Net profit was S$1.170b versus S$954m; post-tax exceptional items were a S$165m gain versus a S$29m loss in H1 FY22.

• Free cash flow was S$1.595b, down 10% YoY; regional associates’ pre-tax earnings rose 15% to S$1.155b, or 18% at constant currency.

Outlook and guidance

• FY23 outlook cited persistent high inflation and rising interest rates as likely to continue curbing economic growth; a strong financial position and cash generation were expected to help manage headwinds.

• Regional associate dividends are expected at ~S$1.4b and FY23 capital expenditure at ~S$2.6b: A$1.7b for Optus and S$0.9b for the rest of operations.

• Near-term Optus performance is expected to be affected by the cyber attack, with a rebound anticipated based on its business fundamentals.

• Priorities include growing 5G share, expanding digital businesses, scaling NCS and investing in networks, data centres, satellites and digital transformation.