Singtel posts decades-low annual profit, eyes new growth strategy

SINGAPORE: Singtel on Thursday (May 27) posted its lowest net profit in at least two decades on exceptional losses and outlined a strategy to focus on 5G and develop new growth engines in information-communication technologies.

The telco, which is Southeast Asia's largest, reported that annual net profit halved to S$554 million - the lowest since at least 1998.

Underlying net profit, which excludes exceptional items, was down 30 per cent year-on-year to S$1.73 billion.

Singtel recorded exceptional charges of about S$1.18 billion for the full year, mostly related to impairments on its investments in digital marketing arm Amobee and cyber-security business Trustwave.

As part of the revamped strategy, Singtel is eyeing partnerships and minority stakes in regional digital companies in areas such as financial services and gaming. Singtel is betting these fast-growing businesses will benefit from its 5G capabilities and large client base, including through stakes in regional telcos, that will lower customer acquisition costs.

Singtel is also exploring options for its infrastructure assets, which include towers, satellites, subsea cables and data centres across the region.

"Some of our assets are valued at telco multiples today, which we have the potential to be revalued at far higher multiples," said CEO Yuen Kuan Moon, who took on the top job in January. Options would include investing in some assets with partners and divesting others, he told a briefing.

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Singtel has already begun a partial sale of its Australian subsidiary Optus' towers and expects the deal to close before year-end.

Singtel will realign its core business to drive 5G market share in Singapore and Australia, including by growing digital businesses in adjacent lifestyle sectors as well as enterprise and cloud solutions.

Its ICT subsidiary NCS will expedite growth in the enterprise sector, building on its services to the public sector, focusing on Singapore, Australia and Greater China.

Singtel shares fell as much as 3.2 per cent before paring some losses to trade 1.6 per cent lower at S$2.41, while the broader market was up 0.7 per cent.