28 slides from Singapore Telecommunications's earnings presentation, May 23, 2024
Slide 1: Financial Results
Financial Results For the full year ended 31 March 2024 Yuen Kuan Moon, Group CEO 23 May 2024
Slide 2: Forward looking statement – Important note
Forward looking statement – Important note The following presentation contains forward-looking statements by the management of Singapore Telecommunications Limited ("Singtel"), relating to financial trends for future periods, compared to the results for previous periods. Some of the statements conta
Slide 3: FY24 at a glance
FY24 at a glance Navigating macro-economic challenges ▪ Mobile business trending positively; Optus recovering well from network outage ▪ NCS growth mitigated declines in legacy enterprise services in SG & AU ▪ Strength of SGD impacted profits, compounded by Naira devaluation Underlying NPAT rose 10%
Slide 4: FY24 key financials
FY24 key financials EBIT Operating revenue EBITDA (ex associates’ contribution) S$14.1B S$3.6B S$1.2B ▼ 3% (Stable1) ▼ 2% (Stable1) ▲ 4% (▲ 5%1) Regional associates’ Underlying net profit Net profit PBT S$2.3B S$2.3B S$0.8B ▲ 3% (▲ 7%2) ▲ 10% (▲ 13%2) ▼ 64% (▼ 63%2) ROIC 7.3% (FY22) 8.3% (FY23) 9.3%
Slide 5: FY24 business highlights
FY24 business highlights Reinvigorate the core Capitalise on growth trends Digital InfraCo Strong EBIT Collaboration Pioneering 5G network Optus-TPG regional growth with NVIDIA slicing technology network sharing deal FMC1 expansion Ramped up Launched in adoption MY & ID Reallocate capital, unlock va
Slide 6: Core business
Core business SG Revenue EBIT Revenue EBIT A$8,062M A$288M S$3,891M S$838M YoY stable YoY ▲ 0.5% YoY ▼ 2% YoY ▼ 5% ▪ Growth in mobile service revenue offset weakness ▪ Mobile service revenue up 3% on roaming growth, in enterprise fixed services mitigating legacy & ICT decline ▪ Mobile regained momen
Slide 7: Growth engines
Growth engines Digital InfraCo Revenue EBIT Revenue EBIT S$2,835M S$183M S$413M S$72M YoY ▲ 4% YoY ▲ 31% YoY ▲ 8% YoY ▼ 1% (Nxera ▲ 10%) ▪ Revenue increased with balanced growth across all ▪ Solid revenue growth driven by SBGs1, above industry averages o Nxera2: mainly price uplifts & higher utiliti
Slide 8: Regional associates’ pre-tax profits
Regional associates’ pre-tax profits S$M Highlights S$93M adverse ▪ Regional associates’ PBT rose 3% impact from stronger SGD o S$93M negative impact from stronger SGD ▲ 3% (▲ 7%1) ▪ Continued market repair & disciplined cost 2,334 control 2,267 ▪ Airtel: Strong growth in India & Africa in Airtel2 6
Slide 9: Strong balance sheet
Strong balance sheet Net debt Net debt to EBITDA Interest rate cover Fixed rate debt Highlights & assoc PBT ▪ Recycled S$8B of assets, S$7.8B 1.3x 17.8x 88% including S$2B in FY24 ▲ ▪ Solid financial position ~S$0.5B (vs Mar 23) (Mar 23: 1.4x) (Mar 23: 16.8x) (Mar 23: 90%) o Significant cash balance
Slide 10: Next Phase of Growth
NEXT PHASE OF GROWTH Tima?
Slide 11: We have delivered on our strategic reset
We have delivered on our strategic reset Reinvigorate Capitalise on Reallocate capital, Champion people the core growth trends unlock value & sustainability 5G leadership in SG & AU Formed Nxera Recycled S$8B of assets Lead in sustainability Drove cost-out & synergies ▪ Secured additional capacity i
Slide 12: From transformation to growth
From transformation to growth Key investor feedback Strategic Reset Transformation Singtel28 Growth Transformation Business performance Growth needs to improve ▪ Laid a strong foundation: ▪ Focus on sustained value ▪ Major realisation: o Sharpened business focus restructuring of Growth engines need
Slide 13: Unveiling Singtel28, a strategic growth plan to achieve sustained value realisation
Unveiling Singtel28, a strategic growth plan to achieve sustained value realisation Value creation (FY25-FY27) FY28 onwards Sustained value realisation Lift business Smart capital performance management Dividend + Growth Champion people & sustainability 13
Slide 14: Laser-focused in optimising the core
Lift business performance Laser-focused in optimising the core Regional Associates SG Drive lean cost structure & growth Improve operational performance Execute on growth opportunities ▪ Synergies from Consumer & Enterprise ▪ Focus on stronger pricing discipline & ▪ Deliver on FMC strategy integrati
Slide 15: Scale growth engines meaningfully
Lift business performance Scale growth engines meaningfully Digital InfraCo Capitalise on tech leadership Scale Nxera ▪ Deliver to 3-axis strategy ▪ Deliver DC Tuas by 2026 ▪ Improve margins by scaling up global delivery network ▪ Scale to 200MW capacity Strengthen AU Ramp up enterprise platform (Pa
Slide 16: Committed to championing people & sustainability
Committed to championing people & sustainability Environment & Purpose-led Social Governance & Sustainability culture impact stewardship reporting Launch of 4D strategy Continued commitment Centre of Excellence Enabling Fit-for-Purpose (Defend/ decarbonise/ to Singtel Touching Lives model with OpCo
Slide 17: Charting a path to long-term sustained shareholder value
Lift business performance Charting a path to long-term sustained shareholder value Singtel FY28 ▪ Market leader with robust margins SG ▪ Agile competitor with lean cost structure ▪ New growth areas at scale ▪ Stronger cashflows/margins with ROIC closer to competitors ▪ Efficient capex deployment (ne
Slide 18: Capital Management Policy
Capital Management Policy Arthur Lang, Group CFO 23 May 2024
Slide 19: Revised capital management policy to recognise successful asset recycling programme
Smart capital management Revised capital management policy to recognise successful asset recycling programme Sustainable growth in ordinary dividends to reflect improved core & continued asset recycling NEW programmatic value realisation Core dividend dividend (VRD) Between 70% - 90% of 3-6¢ per sha
Slide 20: Smart capital management supports growth & returns
Smart capital management Smart capital management supports growth & returns S$8B recycled since strategic reset Additional ~S$6B pipeline for growth & returns S$B S$B ~8 ▪ Excess capital to be returned ~6 ~2 to shareholders, after funding for growth ▪ Excess capital to be returned to shareholders ▪
Slide 21: We expect to increase total ordinary dividends
Smart capital management We expect to increase total ordinary dividends >S$6B in dividends declared since strategic reset S cents +52% • VRD funded by excess capital Implies 15.0 yield of from past & future asset 6.3%4 recycling efforts, after investing Strategic 3.82 in growth reset • Programmatic
Slide 22: Forging network of capital partners for growth investments
Smart capital management Forging network of capital partners for growth investments Successful capital partnerships.. … brings additional value add Private capital suits investments with longer- dated capital-intensive assets 20% Nxera stake sale to KKR Value illumination Brings strategic expertise
Slide 23: Outlook
Outlook FY22 FY23 FY24 FY25 outlook EBIT growth rate High single digit to -9% +6% +4% (Ex associates’ contributions) low double digits1 Cost savings2 S$0.2B S$0.2B1 (Singtel SG & Optus) Regional Associates’ S$1.3B3 S$1.1B dividend Value realisation 3.8¢/share 3 - 6¢/share dividend 1. Based on averag
Slide 24: Capex outlook
Capex outlook S$B 2.81 2.1 1.0 S$0.7B FY25 core capex4 0.3 fully funded ▪ Decline in core capex 1.42 1.22 FY25 growth capex5 (AU) (AU) ▪ Scaling up regional DC platform ▪ Pilot new GPUaaS business 0.5 0.6 (ST3) (ST3) FY24 FY25F Core capex Growth capex 1. Based on average exchange rate of AUD1: S$0.8
Slide 25: Singtel28: Future-focused aspirations
Singtel28: Future-focused aspirations Value creation (FY25-FY27) FY28 onwards Lift business Smart capital Sustained value performance management realisation Optimise core Supporting higher returns EBIT growth of high single digit to Dividends to reflect business low double digits improvements & succ
Slide 26: Appendix
APPENDIX
Slide 27: Optus Enterprise refreshed strategy
Optus Enterprise refreshed strategy Main Pressure Points Impacting B2B How do we respond to the new operating environment? Market NBN-driven profitability/margin pressure in Fixed Data • Streamlined product catalogue (250+ to <100 products) Structural decline in Fixed Voice • Rationalised vendor por
Slide 28: Singtel
Singtel