Singtel has delivered a solid performance for the third quarter ending 31 December 2024, showcasing a 22% year-on-year (YoY) increase in underlying net profit to S\$680 million, or 23% in constant currency terms. This growth was largely fueled by strong contributions from Optus, NCS, and regional associates like Airtel and AIS. Shareholders have significant developments to digest, with potential implications for the company’s share value.

Key Financial Highlights

• Underlying net profit rose to S\$680 million (+22%), driven by improved performances of Optus, NCS, and regional associates.
• Net profit more than doubled to S\$1.32 billion, buoyed by a net exceptional gain compared to a loss in the corresponding quarter last year.
• Operating revenue remained stable at S\$3.63 billion (+1.0% YoY).
• EBITDA grew slightly to S\$943 million (+0.9%), with an EBITDA margin of 26%.
• EBIT climbed 6.2%, supported by lower depreciation charges.
• Share of regional associates’ post-tax profits surged 23%, reflecting strong performances by Airtel and AIS, albeit lower contributions from Telkomsel, Intouch, and Globe.

Exceptional Gains Drive Net Profit Surge

Singtel recorded net exceptional gains of S\$639 million for the quarter, a stark contrast to the S\$94 million loss in the same quarter last year. The gains were primarily attributed to:

• The disposal of partial stakes in Intouch (net gain of S\$170 million) and Indara (net gain of S\$22 million).
• Singtel’s share of Airtel’s exceptional gains, including a fair value gain from the consolidation of Indus Towers, reversal of doubtful debt provisions, and currency exchange gains.

These exceptional gains significantly boosted net profit to S\$1.32 billion, marking a 183% YoY increase.

Segmental Performance Insights

Key performances across business units were as follows:

• Optus: Revenue grew 4.1%, driven by mobile service growth (+4.7%), higher prepaid customer base, and increased sales of high-end devices. EBIT surged 45% due to disciplined cost management and lower depreciation expenses.
• Singtel Singapore: Revenue declined 4.8% due to lower mobile and legacy carriage services. However, fixed broadband and IoT connectivity revenue grew, and EBITDA improved slightly (+1.1%) due to cost optimization.
• NCS: Revenue rose 5.9%, driven by growth in Gov+ and Telco+ businesses. EBIT grew by 15%, supported by strong bookings worth S\$816 million.
• Digital InfraCo: Revenue dropped 6.4%, impacted by lower project-based fees. EBIT fell 51% due to higher maintenance and expansion costs.

Shareholder Updates and Forward Guidance

For the nine months ended 31 December 2024, Singtel’s underlying net profit rose 11% to S\$1.87 billion, while net profit declined 2% to S\$2.55 billion due to lower exceptional gains compared to the prior year. Shareholders should note the following:

• Singtel expects EBIT growth of high teens to low twenties (previously low double digits) for FY25.
• Dividends from regional associates are projected to rise to S\$1.3 billion, up from S\$1.1 billion.
• The company plans total capital expenditures of S\$2.8 billion, with S\$1.8 billion allocated to core investments, including 5G networks and digital transformation initiatives.
• Estimated net proceeds of S\$1.0 billion are anticipated from the dilution of equity interest in Singtel Somerset Pte. Ltd. from 100% to 51%.

Singtel has reaffirmed its commitment to paying an ordinary dividend of approximately 16.5 cents per share for FY25, subject to shareholder approval and full-year performance.

CEO’s Outlook

Group CEO Yuen Kuan Moon expressed optimism despite macroeconomic uncertainties, stating, “We are making good progress with our Singtel28 plan for growth and sustained value realization. We will stay focused on lifting business performance by capturing growth opportunities in artificial intelligence, data centers, and global connectivity.”