Dear Shareholders,

This has proven to be the most challenging year in Singtel’s history, as we faced a convergence of intensified competition across our businesses, adverse regulatory and court rulings in India and an unprecedented public health crisis that has sent economies around the world reeling. Against this backdrop, our net profit for FY 2020 declined 65% to S$1.08 billion. Excluding exceptionals, a key item being Airtel’s regulatory charges, underlying net profit would have dropped 13% to S$2.46 billion.

Competition and industry headwinds

Intensified competition across markets is eroding industry profit pools. In our consumer business, competition has driven up data allowances, blunting the ability to monetise data growth. We have seen the growth of MVNOs and value-seeking consumers shift to SIM Only plans. Given the financial stress experienced by consumers and businesses in a COVID-19 world, we expect this shift to value to become more pronounced.

Despite the heightened competition, we gained market share in mobile and fixed services in Singapore while our enterprise business also defended its market leadership not just in Singapore but across the region. Looking ahead, our recent 5G licence win will allow us to bolster our network leadership in Singapore and build a 5G ecosystem across the region with our associates. This should create new revenue opportunities as industries and enterprises use the intelligent connectivity we provide to transform their business models and grow their businesses.

Airtel performance recovering

The Indian telecoms market has moved past the price war and consolidation of the last two years into an improved phase of market repair. Airtel has begun recording gains in pricing and market share in a three-player market, significantly improving last year’s performance and carrying this momentum into the new year. During the year, it successfully raised capital and is well positioned to compete and invest as India transitions to a digital economy.

As a growth rather than a yield stock, Airtel does not contribute materially to Singtel’s cash flow by way of dividends. The market value of our stake in Airtel at the end of FY 2020 was S$15 billion, higher than the book value of S$6 billion. Despite the challenges, your Board takes a long-term view of the growth potential of the Indian digital economy and the value of this business to Singtel.

Better positioned post-COVID  

Singtel’s management continues to steer the business through the uncertainty and impact of COVID-19. Contingency plans for dealing with the pandemic have been effective in keeping our people safe and ensuring business continuity, particularly the provision of essential services for our customers. With the pandemic changing the way we work and interact and how businesses engage their customers, the digitalisation that has been integral to our transformation these past years has allowed us to adapt and pivot seamlessly to the new normal. Building on our efforts in recent years to move retail and enterprise customers to digital channels and services, we should emerge from this crisis better positioned overall.  

Where we stand  

The uncertainties of COVID-19 make it hard to forecast the year ahead and for this reason, Singtel did not issue any guidance at the financial year end. The Group has ensured ample liquidity and debt facilities to cope with the unpredictability of the current operating environment as well as commence our investment in the rollout of 5G where the returns are expected to be mid to long term in nature as applications emerge. Considering the implications of COVID-19 and future investment needs, the Board recommended a reduced final dividend of 5.45 cents bringing a total of 12.25 cents to shareholders for the full year. I trust you will understand this is a prudent necessity.

Standing with the community

We can be proud of the way Singtel has come together and stood with the community during this COVID-19 crisis. The reliance on our networks to work and learn from home during the circuit breaker period was a stark reminder that our services are critical to both the community and economy. Through a combination of employee commitment and company care, Singtel staff in key support and frontline roles continued heading into work, to serve the community. As a company, we also raised S$2 million for vulnerable groups impacted by COVID-19, besides extending a range of free services to the broader society coping with the pressures of staying at home.  

Thanks and farewell

I would like to extend my thanks and the thanks of the Board to all our frontliners and employees for holding the fort these past months. Knowing the Singtel DNA, I have every confidence they will see the company through this crisis to recovery. As I step down as Chairman, I would like to thank past and present Directors for their valuable guidance and support and our management for their tireless commitment to the business over many years. Their calm and discipline no matter the circumstances will undoubtedly lead the Group through the current volatility towards positive and progressive outcomes.

I’d also like to welcome Lee Theng Kiat, Executive Director of Temasek Holdings and Chairman of Temasek International, as the incoming Singtel Chairman. Theng Kiat’s extensive experience in mobile communications and data services and his impeccable corporate governance and leadership credentials will be highly beneficial to Singtel as it charts its way forward in the new economy. Lastly, many thanks to our shareholders for their support these past years. It has been a privilege to serve.

Stay safe and keep well.

Yours sincerely,