FY2021 Full-Year Financial Results Briefing

Good morning and welcome to all investors and analysts. We are very privileged to have you join us during these unprecedented times for the announcement of Singtel's results for the year ended 31 March 2021. My name is Sin Yang Fong.

Let me introduce management in the meeting. Here in Comcentre boardroom, we have Mr Yuen Kuan Moon, Group CEO; Mr Arthur Lang, Group CFO and joining us remotely we have Ms Kelly Bayer Rosmarin, CEO, Optus; Ms Anna Yip, CEO, Consumer Singapore; Mr Bill Chang, CEO, Group Enterprise; Mr Ng Kuo Pin, CEO, NCS; and Mr Samba Natarajan, CEO, Strategic Portfolio.

Moon and Arthur will take us through a presentation and later we will have time for Q&A. Without further ado, let me now hand over to Moon.

Thanks, Yang Fong. Good morning and thank you for joining us this morning. We'll start with a presentation, where first I'll give you a brief overview of our financial year '21 results that we just released this morning. I will then spend some time to discuss our new strategic direction, which is aimed at sharpening the Group's focus to capture growth and unlock value. Arthur will then add some details on the Group's refreshed capital management framework, dividend policy and outlook. With that, let me start with an overview of our FY21 results.

The Group's performance was heavily weighed down by COVID-19, adding to the ongoing structural and competition-driven challenges in our carriage business. However, it was heartening to see Optus ARPU and mobile service revenue return to growth in the second half, as our efforts to drive price discipline in the market paid off.

ICT continues to be a bright spot for us. Revenue from NCS and data centre services rose strongly, helped by customers stepping up on their digitalisation efforts and rising demand for hyperscaler data centre operators.

H2 FY21 Results Earnings Conference Call and Q&A 27 May 2021 Airtel has also reported stronger performances in India and Africa. The Board has recommended a final ordinary dividend of $0.024 per share, bringing total dividends to $0.075 per share for the full year.

I'll now expand on our key revenue drivers. The increase in ICT services reflected the broad-based growth by NCS and strong demand for data centres storage services. Optus mobile service revenue picked up in the second half, buoyed by an increased penetration of Optus Choice plans, which drove a 4% increase in ARPU.

However, COVID-19 had a prolonged and adverse impact on the Group's roaming, prepaid, equipment sales and digital marketing services. In Australia, NBN migration revenue fell, tapering off from the previous year's high, as the network rollout nears completion. We also saw declines in the fixed voice and Pay TV, as structural and competitive forces continue to weigh on both segments. Overall, our revenue declined by 5% for the year.

EBITDA fell 16% for the year, mainly due to the loss of high margin roaming revenues and lower NBN migration revenues. Fixed line margins in Australia continued to be very challenged. Our Regional Associates' pre-tax profits rose 4%, this came despite a downturn in customer spending from COVID- 19.

A strong contribution from Airtel offset weakness in Indonesia. Where Telkomsel narrowed its’ pricing gap against its peers to improve its competitive positioning. Airtel's staged a strong recovery and capped the year with double-digit increases in operating revenue and EBITDA, on the back of tariff improvements and robust 4G additions in India and sustained momentum in Africa.

The Group recorded exceptional losses of S$1.2 billion, primarily due to the impairment charges on investments in Amobee and Trustwave, which we have announced on 14 May. Excluding these exceptional charges, underlying net profit fell 30% for the year. However, the impact on our free cashflow was less pronounced. Free cashflow declined 10%, due to lower earnings and increased capital expenditure on 5G.

I will now introduce our new strategic direction but let me start with some observations on our stock price. Suffice to say, we're not happy with where it is today. It seems that our investors are not according the appropriate value to our Company as they have applied various discounts to our sum- of-parts. We're working hard to change their minds and this narrative.

Let me now explain how we plan to achieve this. We aspire to the leading communications and digital service provider for our customers and it is built on four key pillars. A reinvigoration of our core business; New growth engines that leverage our right to play with secular growth trends; Portfolio transformation to invest for grow and unlock value and last, but not least, championing people and sustainability, which will be covered in our sustainability report to be released in July.

Let me start with the core. We are doubling down on innovation at the core. 5G is a massive endeavour with significant capital commitment, but essential to unlock new revenue streams in the future. Digitalisation is another anchor that will transform customer experience and bring a step change to our cost structure and profitability.

H2 FY21 Results Earnings Conference Call and Q&A 27 May 2021 Consumer Singapore is focused on initiatives to expand its market leadership. Consumer Australia is executing to a customer-led strategy to drive sustainable profitability and value uplift. Group Enterprise will double down on 5G and next generation products and has started to develop the significant 5G Edge Cloud opportunity for the Group.

As we execute these capabilities that will enable us to add significant value across the Group to our associates and to support many of our other growth initiatives.

I'll now spend a minute talking about our 5G progress. We are fast accelerating our 5G push and just launched our 5G standalone network in Singapore. You can soon offer network slicing capabilities of a dynamic distribution and optimization of network resources, enabling revolutionary applications, like self-driving cars, real-time immersive entertainments and massive IoT connection.

Optus continues to advance its speed leadership in Australia. It now has the fastest 5G speeds in Sydney and Melbourne and a switched on 5G connectivity at Optus Stadium in Perth. We are also rapidly progressing on capabilities and strategic partnerships to expand our 5G ecosystem and are working with Enterprise clients to develop low latency 5G solutions on our multi-access Edge Compute infrastructures in Singapore and Australia. We're also progressing on developing a host of next generation consumer use cases – zero rated gaming bundles in Singapore and Optus Living network are examples.

Let me now move on to our future growth engines, starting with an Enterprise centric opportunity. COVID has accelerated a shift to digital, which will only gain pace as the global economy starts to recover. NCS has a strong history of success in this space and has delivered seven straight years of positive revenue growth.

Building on this momentum, we seek to transform NCS into Asia’s B2B digital services leader through both organic and inorganic initiatives. The set-up of multiple innovation centres and integration of Trustwave technology services are the first steps to rapidly build specialisation, which we will leverage to expand beyond Singapore. This is the first step of Trustwave's strategic review that we announced a fortnight ago.