H1 FY2021 Financial Results Briefing

Ladies and gentlemen, welcome to the Singtel’s half year FY21 results conference call. If you have any issues during the call, please press star zero to speak to an operator. Ms Sin, over to you.

Thank you. A warm welcome to all investors and analysts. You are listening to Singtel’s earnings conference call for the half year ended 30 September 2020. My name is Sin Yang Fong and let me introduce management on the call. We have Ms Chua Sock Koong, Group CEO. Mr Yuen Kuan Moon, Group CEO Designate. Ms Kelly Bayer Rosmarin, CEO Optus. Mr Bill Chang, CEO Group Enterprise. Mr Samba Natarajan, CEO Group Digital Life. Mr Arthur Lang, CEO International. Ms Lim Cheng Cheng, Group CFO. Ms Jeann Low, Group Chief Corporate Officer. Mr Quah Kung Yang, CFO Optus.

Before we start taking questions, I would like to invite Sock Koong to share some highlights from this set of results.

Thanks, Yang Fong and good morning, everyone. Thanks for joining us for Singtel financial results for the half year ended 30 September 2020. I’ll just share with you some key highlights from our business. The Group performance for the half year was weighed down by the fixed business in Australia and that was exacerbated by the COVID pandemic.

H1FY21 Earning Conference Call 12 November 2020 Lower equipment sales and margins, ongoing price erosion in carriage, combined with adverse margin impact from the higher mix of NBN resale and declining NBN migration revenue contributed to the sharp decline in consumer Australia’s revenue and earnings.

COVID-19 exacerbated the decline as roaming revenue fell sharply due to travel restrictions and border closures.

While economic uncertainty impacted demand. We delivered a strong performance in ICT services, our digital investments set us up strongly for growth, notwithstanding short-term disruption in demand and supply condition.

NCS recorded strong growth across its line of business. We also saw good momentum in cloud and cybersecurity services in Asia Pac.

We have been unrelenting in our support to customers and the community during this difficult period. More than ever, the pandemic has highlighted the importance of the critical infrastructure, seamless connectivity and digital solutions that we provide. We are accelerating our efforts to position ourselves for the digital economy - digitalization remained central as we moved customers to additional channels and platforms and improve our operating model and processes.

We’re also making significant investments into our 5G network and capability, which will unlock new revenue streams and deliver returns over the mid to long term.

For the half year, revenue decreased by 10% due mainly to fall in equipment sales, roaming and pre- paid mobile services. Optus revenue and earnings declines were marked by headwinds, particularly in the fixed business and intense competition.

We also experienced delays and deferrals in ICT and infrastructure spending with the rollout of projects disrupted by manpower constraints and site access. Despite the disruption, ICT services grew 8% with robust performance from NCS as it delivered strongly on government projects. EBITDA fell 19% while EBIT declined 44% on higher depreciation and amortisation.

Regional associates’ pre-tax profits rose 11%. Airtel delivered stronger results led by operating momentum in India and Africa. Offsetting lower contributions from Telkomsel, due to aggressive price competition and the prolonged COVID lockdown.

Underlying net profit declined 36%. The Group recorded a net profit compared to a net loss last year as there were higher exceptional losses booked last year related to provisions for the India adjusted gross revenue regulatory matter.

I also just want to highlight that on a sequential quarter basis, we saw improvements in our businesses in the second quarter as lockdown measures eased and customers' spending gradually returned. Carriage services posted sequential quarter growth, although they have not reached pre-pandemic levels yet.

In Singapore, mobile service revenue growth was underpinned by increased pre-paid usage as previously quarantined foreign workers returned to work progressively. Australia consumer mobile service revenue rebounded in the September quarter with Optus Choice plans growing as a proportion of the subscriber base and lifting ARPU.

H1FY21 Earning Conference Call 12 November 2020 In the Enterprise segment, carriage and ICT revenues rose steadily, aided by business re-opening and also resumption of projects, Amobee also posted revenue growth in September quarter led by a modest recovery in ad spending in North America.

Let me quickly just wrap up by you know talking through the outlook and dividends. In view of the continued uncertain economic environment, we will not provide guidance on the outlook for the year, except that dividends from the regional associates will be approximately S$1.3 billion and that Group capital expenditure, including 5G network, will be around S$2.2 billion comprising $1.5 billion for Optus and S$700 million for the rest of the group.

The Group has also - the Board has approved an interim dividend of $0.051 per share. That represents approximately 100% of underlying net profit for the half year.

Total dividends for the full year, are expected not to exceed the Group’s underlying net profit. We are committed to our investment grade credit rating and will review our dividend policy at the end of the financial year when there’s more clarity on the impact of COVID-19 pandemic on the Group’s businesses.

So with that, let me hand it back to Yang Fong.

Thank you, Sock Koong. Participants, please be advised that this call is being recorded for playback and transcription. We will now invite questions from participants. Our operator will assist you to put through your questions.

Thank you ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question today, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Thank you.

Once again, ladies and gentlemen, just a reminder, it is star one to ask a telephone question. We now have our very first question in queue from Piyush Choudhary from HSBC Securities. Please, ask your question.