| Financial Year ended 31 March | |||||||||
| 2017 (S$ million) |
2016 (S$ million) |
Change (%) | Change in constant currency (1) (%) |
||||||
| Operating revenue | 16,711 | 16,961 | -1.5 | -2.6 | |||||
| EBITDA | 4,998 | 5,013 | -0.3 | -1.5 | |||||
| EBITDA margin | 29.9% | 29.6% | |||||||
| Share of associates' pre-tax profits | 2,942 | 2,791 | 5.4 | 5.6 | |||||
| EBIT | 5,701 | 5,655 | 0.8 | 0.3 | |||||
| (exclude share of associates' pre-tax profits) | 2,759 | 2,864 | -3.7 | -4.8 | |||||
| Net finance expense | (260) | (265) | -2.0 | -3.4 | |||||
| Taxation | (1,548) | (1,597) | -3.1 | -3.2 | |||||
| Underlying net profit (2) | 3,915 | 3,805 | 2.9 | 2.3 | |||||
| Underlying earnings per share (S cents) | 24.4 | 23.9 | 2.0 | 1.4 | |||||
| Exceptional items (post-tax) | (63) | 66 | nm | nm | |||||
| Net profit | 3,853 | 3,871 | -0.5 | -1.0 | |||||
| Basic earnings per share (S cents) | 24.0 | 24.3 | -1.4 | -1.9 | |||||
| Share of associates' post-tax profits | 2,093 | 1,930 | 8.4 | 8.3 | |||||
Underlying net profit grew 2.9% on higher associates’ earnings and lower tax expenses. With an exceptional loss compared to an exceptional gain in FY 2016, net profit was stable at S$3.85 billion. Excluding Airtel which faced disruptive price competition in India, net profit would have grown 2.3%.
The Group’s operating revenue declined by 1.5% due mainly to continued declines in voice (local, IDD, roaming) partially offset by strong growth in data, ICT and digital revenues. Excluding the impact of regulatory mobile termination rates (1) change in Australia from 1 January 2016 ("rates change"), operating revenue would have been up 2.0%.
EBITDA remained stable with investments in content and network expansion, reflecting resilience in the core businesses with strong cost management.
Depreciation and amortisation charges rose on increased network and spectrum investments, and higher amortisation charges on the acquired intangibles of Trustwave, Inc. ("Trustwave").
Consequently, the Group’s EBIT (before the associates’ contributions) declined 3.7%.
In the emerging markets, the regional associates continued to record strong growth in customer base and data usage with strategic investments in networks and spectrum. The customer base of the Group and its associates reached 638 million in 22 countries as at 31 March 2017, up 5.4% or 33 million from a year ago.
Despite weakness in Airtel India, the associates’ post-tax underlying profit contributions rose 8.4%. The increase was led by strong growth at Telkomsel and NetLink Trust, and first time contribution from Intouch Holdings Public Company Limited ("Intouch") acquired in November 2016, offsetting lower profits at Airtel, AIS and Globe.
Telkomsel continued to deliver robust growth across voice, data and digital services. On a consolidated basis, Airtel’s earnings fell, even as operating performance in Africa has improved. In India, Airtel’s results were adversely affected by the new operator which offered free voice and data, as well as higher network depreciation, spectrum amortisation and related financing costs. Both AIS and Globe recorded higher revenues but earnings were impacted by increased depreciation, spectrum amortisation charges and financing costs. NetLink Trust’s revenue and earnings grew at double-digit on the back of increased fibre penetration in Singapore.
Including the associates’ contributions, the Group’s EBIT was stable at S$5.70 billion.
Net finance expense declined 2.0% on higher dividend income from the Southern Cross consortium partly offset by higher interest expense on increased borrowings and lower net interest income from NetLink Trust as a result of partial repayment of unitholder’s loan by NetLink Trust in March 2016.
The net exceptional loss mainly comprised share of AIS’ handset subsidy costs, share of Singapore Post’s exceptional loss, and staff restructuring costs partly offset by a gain on dilution of equity interest in Singapore Post.
The Group has successfully diversified its earnings base through its expansion and investments in overseas markets. Hence, the Group is exposed to currency movements. On a proportionate basis if the associates are consolidated line-by-line, operations outside Singapore accounted for three-quarters of both the Group’s proportionate revenue and EBITDA.
| Financial Year ended 31 March | |||||||||
| 2017 (S$ million) |
2016 (S$ million) |
Change (%) | Change in constant currency (1) (%) |
||||||
| Operating revenue | |||||||||
| - Group Consumer | 9,572 | 10,110 | -5.3 | -6.9 | |||||
| - Group Enterprise | 6,600 | 6,397 | 3.2 | 2.7 | |||||
| Core Business | 16,172 | 16,507 | -2.0 | -3.2 | |||||
| - Group Digital Life | 539 | 454 | 18.7 | 18.8 | |||||
| Group | 16,711 | 16,961 | -1.5 | -2.6 | |||||
| EBITDA | |||||||||
| - Group Consumer | 3,295 | 3,266 | 0.9 | -0.9 | |||||
| - Group Enterprise | 1,913 | 1,959 | -2.3 | -2.6 | |||||
| Core Business | 5,208 | 5,225 | -0.3 | -1.5 | |||||
| - Group Digital Life | (122) | (137) | -10.6 | -10.5 | |||||
| - Corporate | (88) | (76) | 16.8 | 16.8 | |||||
| Group | 4,998 | 5,013 | -0.3 | -1.5 | |||||
| EBIT (before share of associates' pre-tax profits) | |||||||||
| - Group Consumer | 1,771 | 1,811 | -2.2 | -3.9 | |||||
| - Group Enterprise | 1,268 | 1,337 | -5.1 | -5.2 | |||||
| Core Business | 3,039 | 3,148 | -3.5 | -4.5 | |||||
| - Group Digital Life | (190) | (206) | -7.4 | -7.3 | |||||
| - Corporate | (90) | (79) | 14.2 | 14.2 | |||||
| Group | 2,759 | 2,864 | -3.7 | -4.8 | |||||
Group Consumer contributed 57% (FY 2016: 60%) and 66% (FY 2016: 65%) to the Group’s operating revenue and EBITDA respectively. Operating revenue declined by 5.3% (stable excluding the rates change) while EBITDA was stable and EBIT declined 2.2% on higher depreciation and amortisation charges with increased investments in mobile network and spectrum.
Singapore Consumer’s operating revenue fell 1.9% on lower voice services and Equipment sales partly offset by growth in mobile data and Home services. Mobile Communications, which contributed 55% of Singapore Consumer’s revenue, was stable as strong data growth mitigated the declines in local and roaming voice. Consumer Home revenue (comprising fixed broadband, Singtel TV and voice) rose 4.4% boosted by increased demand for higher speed fibre broadband plans and the sub-licensing of content rights for the Premier League 2016/2017 season. Despite lower revenue, EBITDA grew 2.4% with strong cost management.
In Australia Consumer, operating revenue declined 8.4% on decline in mobile but increased 2.8% excluding the impacts of device repayment plan credits and rates change. Outgoing mobile service revenue declined 5.2% but would be up 2.7% excluding the impact of device repayment plan credits, driven by strong customer additions underpinned by a robust and resilient mobile network. Mass Market Fixed revenue grew 8.0% driven by higher NBN (National Broadband Network) revenue. With lower revenue and investment in content, EBITDA decreased 1.9%.
Group Enterprise contributed 39% (FY 2016: 38%) and 38% (FY 2016: 39%) to the Group’s operating revenue and EBITDA respectively. Operating revenue grew 3.2% as strong ICT performance mainly from cyber security and provision of infrastructure services in Singapore was partly offset by continued price declines in carriage services and lower voice. ICT which includes cloud, cyber security, and smart city solutions, contributed 45% of total enterprise revenue and grew 11%. Overall EBITDA declined 2.3% due to ongoing investments to build ICT capabilities and intense price competition in Australia. EBIT decreased 5.1% after including the amortisation of acquired intangibles of Trustwave. Excluding Trustwave, EBITDA and EBIT would have declined by 1.2% and 1.8% respectively.
Group Digital Life has three main businesses, namely digital marketing (Amobee), regional premium OTT video (HOOQ) and advanced data analytics and intelligence (DataSpark). Operating revenue was up 19% driven mainly by Amobee’s strong performance in social, video and display advertising. Negative EBITDA fell 11% due to lower losses at Amobee on increased scale partly offset by higher content and marketing costs at HOOQ as it ramped up its operations. Negative EBIT decreased 7.4% after including depreciation and amortisation of acquired intangibles of Amobee.
With acquisition of Turn, Inc. on 10 April 2017, Amobee is now one of the largest independent digital marketing technology companies globally.
| Financial Year ended 31 March | |||||||||
| 2017 (S$ million) |
2016 (S$ million) |
Change (%) | Change in constant currency (1) (%) |
||||||
| Group share of associates' pre-tax profits | 2,942 | 2,791 | 5.4 | 5.6 | |||||
| Share of post-tax profits | |||||||||
| Telkomsel | 1,071 | 857 | 24.9 | 22.2 | |||||
| AIS (2) | 323 | 370 | -12.8 | -12.2 | |||||
| Airtel (2) | |||||||||
| - ordinary results (India and South Asia) | 371 | 527 | -29.5 | -27.1 | |||||
| - ordinary results (Africa) | (102) | (195) | -48.0 | -45.8 | |||||
| - exceptional items | - | (15) | nm | nm | |||||
| 270 | 316 | -14.7 | -12.1 | ||||||
| Globe | |||||||||
| - ordinary results | 208 | 215 | -3.3 | 0.8 | |||||
| - exceptional items | - | 20 | nm | nm | |||||
| 208 | 235 | -11.6 | -7.9 | ||||||
| Intouch (3) | |||||||||
| - operating results | 35 | - | nm | nm | |||||
| - amortisation of acquired intangibles | (7) | - | nm | nm | |||||
| 28 | - | nm | nm | ||||||
| Regional associates | 1,899 | 1,779 | 6.8 | 6.7 | |||||
| NetLink Trust (4) | |||||||||
| - operating results | 73 | 39 | 90.6 | 90.6 | |||||
| - amortisation of deferred gain | 57 | 56 | 1.1 | 1.1 | |||||
| 130 | 95 | 37.6 | 37.6 | ||||||
| Other associates (2) | 64 | 57 | 12.2 | 12.2 | |||||
| Group share of associates' post-tax profits | 2,093 | 1,930 | 8.4 | 8.3 | |||||
| Telkomsel | AIS | Airtel (1) | Globe | ||||||
| Country mobile penetration rate | 137% | 135% | 91% | 118% | |||||
| Market share, 31 March 2017 (2) | 45.8% | 44.8% | 23.3% | 48.1% | |||||
| Market share, 31 March 2016 (2) | 48.0% | 45.9% | 24.3% | 45.8% | |||||
| Market position (2) | #1 | #1 | #1 | #2 | |||||
| Mobile customers ('000) | |||||||||
| - Aggregate | 169,367 | 40,648 | 355,673 | 58,580 | |||||
| - Proportionate | 59,278 | 9,479 | 129,678 | 27,615 | |||||
| Growth in mobile customers (%) (3) | 10% | 4.4% | 4.0% | 2.3% | |||||
The Group’s combined mobile customer base reached 638 million, a growth of 5.4% or 33 million from a year ago. Telkomsel registered 10% increase in its customer base to 169 million, including 90 million of data customers as at end of March 2017. Airtel’s total mobile customer base covering India, Sri Lanka and across Africa, reached 356 million as at 31 March 2017. This represented an increase of 4.0%, or a growth of 6.6% excluding operations in Bangladesh, from a year ago.
Telkomsel performed strongly and delivered double-digit growth in operating revenue and EBITDA of 12% and 14% respectively. The increase was boosted by growth across voice, data and digital businesses on a higher customer base, increased smartphone penetration and improvement in network quality. With lower depreciation charges due to accelerated depreciation on certain equipment in the previous year, Telkomsel’s post-tax contribution grew 25%.
AIS’ service revenue grew 3% on higher data usage driven by improved 4G network coverage, and higher postpaid and fixed broadband revenues. EBITDA (before handset subsidy) rose 2% (2) on lower regulatory fees partly offset by higher network costs from network expansion. With higher spectrum amortisation charges and related financing costs, AIS’ post-tax contribution declined 13%.
In India, the mobile industry declined on entry of a new operator which offered free voice and data services. Consequently, Airtel’s operating revenue grew only 4% in India on growth in non-mobile segments, while mobile revenue was stable. EBITDA rose 5% on aggressive cost optimisation drive. In Africa, operating revenue fell 3% in constant currency terms but would have increased 3% if excluding the disposed subsidiaries (Burkina Faso and Sierra Leone) on growth in data customer base and consumption. EBITDA rose 13% on improved operational efficiency. The depreciation of African currencies mainly Nigerian Naira had resulted in declines in US Dollar reported revenue and EBITDA of 15% and 4% respectively. With higher depreciation from network assets and increased spectrum amortisation and financing costs in India, Airtel’s post-tax contribution declined 15%.
Globe’s service revenue grew 4% driven by growth in mobile data, broadband and corporate businesses partially offset by lower voice. EBITDA rose 5% despite higher network costs to support the growing customer base and network expansion. The growth was offset by higher depreciation charges from an expanded asset base and equity accounted losses of Vega Telecom, Inc. from May 2016, and the acquisition-related interest expense. In addition, certain one-off disposal and fair value gains were recorded in FY 2016. Consequently, Globe’s post-tax contribution declined 12%.
In November 2016, Singtel acquired 21% equity interest in Intouch (3). The Group’s share of Intouch’s post-tax profit was S$35 million. After including amortisation of acquired intangibles of S$7 million, Intouch’s post-tax contribution was S$28 million.
NetLink Trust’s revenue and EBITDA grew strongly at 16% and 20% respectively, while its net profit contribution (including S$57 million of amortised gain arising from deferred gain on disposal of assets and business) rose 38%. The growth was mainly driven by an increase in fibre connections.
| Financial Year ended 31 March | |||||||||
| 2017 (S$ million) |
2016 (S$ million) |
Change (%) | |||||||
| Net cash inflow from operating activities | 5,315 | 4,648 | 14.4 | ||||||
| Net cash outflow for investing activities | (4,832) | (2,740) | 76.4 | ||||||
| Net cash outflow for financing activities | (422) | (2,044) | -79.3 | ||||||
| Net change in cash balance | 60 | (136) | nm | ||||||
| Exchange effects on cash balance | 12 | 35 | -65.8 | ||||||
| Cash balance at beginning of year | 462 | 563 | -17.9 | ||||||
| Cash balance at end of year | 534 | 462 | 15.6 | ||||||
| Singtel (1) | 1,040 | 869 | 19.7 | ||||||
| Optus (2) | 514 | 631 | -18.5 | ||||||
| Associates (net dividends after withholding tax) | 1,500 | 1,218 | 23.2 | ||||||
| Group free cash flow (2) | 3,054 | 2,718 | 12.4 | ||||||
| (exclude ATO tax payment) | 3,197 | 2,718 | 17.6 | ||||||
| Optus (in A$) (2) | 500 | 617 | -19.0 | ||||||
| (exclude ATO tax payment) | 634 | 617 | 2.7 | ||||||
| Cash capital expenditure as a percentage of operating revenue | 14% | 11% | |||||||
The investing cash outflow was S$4.83 billion. In November 2016, the Group paid S$1.59 billion and S$884 million for the acquisitions of 21% equity interest in Intouch and an additional 7.4% equity interest in Bharti Telecom Limited ("BTL") respectively. Capital expenditure totalled S$2.26 billion, comprising S$851 million for Singtel and S$1.41 billion (A$1.35 billion) for Optus. In Singtel, major capital investments in the year included S$351 million for fixed and data infrastructure, S$168 million for mobile networks and S$332 million for ICT and other investments. In Optus, capital investments in mobile networks amounted to A$678 million with the balance in fixed and other investments.
The Group’s free cash flow increased 12% to S$3.05 billion and grew 18% excluding the tax payment to the ATO, on higher operating cash partly offset by higher capital expenditure.
Net cash outflow for financing activities amounted to S$422 million. Major cash inflows included proceeds received from the issuance of 386 million ordinary shares of Singtel totalling S$1.60 billion and net increase in borrowings of S$1.16 billion. Financing cash outflows included payments of S$1.71 billion for final dividends in respect of FY 2016, and S$1.11 billion for interim dividends in respect of FY 2017.
| As at 31 March | |||||||||
| 2017 (S$ million) |
2016 (S$ million) |
||||||||
| Current assets | 5,918 | 5,165 | |||||||
| Non-current assets | 42,377 | 38,400 | |||||||
| Total assets | 48,294 | 43,566 | |||||||
| Current liabilities | 9,272 | 6,540 | |||||||
| Non-current liabilities | 10,808 | 12,023 | |||||||
| Total liabilities | 20,081 | 18,563 | |||||||
| Net assets | 28,214 | 25,003 | |||||||
| Share capital | 4,127 | 2,634 | |||||||
| Retained earnings | 29,494 | 28,457 | |||||||
| Currency translation reserve (1) | (4,508) | (4,940) | |||||||
| Other reserves | (900) | (1,161) | |||||||
| Equity attributable to shareholders | 28,214 | 24,989 | |||||||
| Non-controlling interests and other reserve | * | 13 | |||||||
| Total equity | 28,214 | 25,003 | |||||||
Total assets increased mainly due to investments in Intouch and BTL, while the increase in total liabilities reflected increased borrowings for investments and general corporate purposes.
The increase in share capital was due to the issuance of 386 million new Singtel shares to Temasek Holdings (Private) Limited to partially finance the acquisitions of shares in Intouch and BTL.
Currency translation losses fell mainly from the translation of the Group’s investments in Optus and Telkomsel from stronger Australian Dollar and Indonesian Rupiah against the Singapore Dollar from a year ago.
| Financial Year Ended 31 March | |||||||||
| 2017 | 2016 | ||||||||
| Gross debt (S$ million) | 10,918 | 9,604 | |||||||
| Net debt (1) (S$ million) | 10,384 | 9,142 | |||||||
| Net debt gearing ratio (2) (%) | 26.9 | 26.8 | |||||||
| Net debt to EBITDA and share of associates’ pre-tax profits (number of times) | 1.3 | 1.2 | |||||||
| Interest cover (3) (number of times) | 23.6 | 25.3 | |||||||
The Group has one of the strongest credit ratings among telecommunication companies in the Asia Pacific region. Singtel is currently rated Aa3 by Moody’s and A+ by S&P Global Ratings. The Group continues to maintain a healthy capital structure.
Singtel maintained its dividend payout ratio at between 60% and 75% of underlying net profit. For the financial year ended 31 March 2017, the total dividend payout, including the proposed final dividend, was 17.5 cents per share or 73% of underlying net profit. The dividend payout is influenced by the Group’s cash flow generation, including dividends from associates.
The Group remains committed to an optimal capital structure and investment grade credit ratings, while maintaining financial flexibility to pursue growth.
For the Group’s outlook for the financial year ending 31 March 2018, please refer to the Management Discussion and Analysis for the fourth quarter and year ended 31 March 2017 announced on 18 May 2017.
