SINGAPORE (THE BUSINESS TIMES) – Upon commencing a strategic review of its two key business units, mainboard-listed Singtel on Thursday (May 27) announced a strategic reset that includes unlocking the value of its infrastructure asset portfolio, including towers, satellites, subsea cables and data centres.
The telco has already begun a partial sale via auction of Optus’ towers in Australia to maximise proceeds from the sale, said Singtel in its filing, and said the group seeks to “more actively recycle” its assets.
Other aspects of the group’s new strategic direction include plans to leverage its 5G leadership to reinvigorate its core consumer and enterprise businesses, and develop new growth engines in ICT (information and communications technology) and digital services.
News of the strategic reset came on the same day Singtel reported a 12 per cent drop in H2 FY2021 earnings before interest, tax, depreciation and amortisation (Ebitda) to $1.93 billion from $2.2 billion the previous year. Net profit for the half year fell 92.7 per cent year on year to $87.6 million from $1.2 billion.
Group revenue for the half year ended March 31 was down 1 per cent year on year at $8.22 billion, compared with $8.28 billion previously.
The bottom-line drag came mainly from exceptional items of $809 million post-tax, which included non-cash impairment charges for the group’s investments in Amobee and Trustwave, for which Singtel says a strategic review is under way.
Rapid shifts in the fast-moving digital marketing and cyber-security industries and economic shocks resulting from Covid-19 had curtailed both businesses’ ability to scale, said the group in its results filing.
The exceptional charges for H2 were lower than the $839 million Singtel said it was expecting in its profit warning issued earlier this month on May 14.
For the full year, Ebitda fell 16 per cent to $3.83 billion from $4.54 billion for FY2020.
Group revenue declined 5 per cent year on year to $15.64 billion from $16.54 billion for FY2020.
Singtel has proposed a final dividend per share of 2.4 cents – bringing its total dividend per share to 7.5 cents, amounting to about $1.23 billion.
This represents a payout ratio of 71 per cent of the group’s underlying net profit for the year, which decreased 30 per cent to $1.73 billion from $2.46 billion for FY2020.
Singtel closed on Tuesday up two cents, or 0.8 per cent, at $2.46, before both the strategic review and its FY2021 results were filed.