Singapore Telecommunications : Financial results presentation for the half year ended 30 September 2020

H1FY21 Financial Results

Presentation

For the half year ended 30 September 2020

Chua Sock Koong, Group CEO

12 Nov 2020

Forward looking statement -

Important note

The following presentation contains forward-looking statements by the management of Singapore Telecommunications Limited ("Singtel"), relating to financial trends for future periods, compared to the results for previous periods.

Some of the statements contained in this presentation that are not historical facts are statements of future expectations with respect to the financial conditions, results of operations and businesses, and related plans and objectives. Forward-looking information is based on management's current views and assumptions including, but not limited to, prevailing economic and market conditions. These statements involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the statements as originally made. Such statements are not, and should not be construed as a representation as to future performance of Singtel.

"S$" means Singapore dollars, "A$" means Australian dollars and "US$" means United States dollars. Any discrepancies between individual amounts and totals are due to rounding.

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Agenda

1. H1FY21 overview

2. Business units

3. Outlook & dividend

4. Supplementary information

H1FY21: business review

Operating results weighed down mainly by Australia Consumer amid structural challenges & COVID-19

• Adverse margin impact from NBN resale & declining NBN migration revenue
• COVID-19:Severe reduction in roaming, prepaid usage & equipment sales

Robust growth in ICT services

• Leveraged our digital investments to support enterprise & government digital transformation
• Strong revenue growth across NCS' business lines, cloud & cyber security

Critical services to our customers

• Supporting their need for seamless connectivity & digital solutions for business recovery

Transforming our business for the digital economy

• Digitalise our core to enhance customer engagement & transform our processes
• Leverage 5G to unlock new revenue streams & deliver returns over the mid to long term

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H1FY21: financial review

(S$m)

Operating Revenue

EBITDA

EBIT (excluding associates)

Regional Associates' PBT1

Underlying NPAT Net profit after tax

H1FY21 H1FY20 (YoY%)

7,425 8,265  10%

1,903	2,345	 19%
596	1,060	 44%

833 749  11%

837	1,312	 36%
466	(127)	 N.M.

• Decline in equipment sales, roaming & prepaid mobile, mitigated by ICT growth
• NBN migration revenue tapering off with near-completion of rollout
• Optus impacted by lower margins from equipment sales & NBN resale
• Significant margin impact from roaming decline
• Mitigated by Job Support Scheme (JSS) credits2
• Strong operating momentum in India & Africa
• Intense competition in Indonesia & prolonged COVID lockdown
• Reduced exceptional Airtel regulatory costs
• Prior period net losses due to significant regulatory losses from adjusted gross revenue in Airtel

1. Excludes exceptional items.
2. Includes S$94m in Job Support Scheme credits in H1FY21. N.M. -not meaningful

5

Q2FY21 : sequential quarter revenue recovery

Singapore Consumer						Australia Consumer
248	244	243							855	866	869	863		853
		218
																	8171
							186	194
Q1FY20	Q2FY20	Q3FY20	Q4FY20	Q1FY21	Q2FY21		Q1FY20	Q2FY20	Q3FY20	Q4FY20	Q1FY21	Q2FY21
					Mobile service revenue (S$m)										Mobile service revenue (A$m)

Group Enterprise

					871		803
	761	758		769	688	719
	682			767	676
	731		658
Q1FY20	Q2FY20	Q3FY20	Q4FY20	Q1FY21	Q2FY21
				Carriage revenue (S$m)			ICT revenue (S$m)

1. Includes waiver of late payment fee for all customers and free credits for healthcare workers.

Group Digital Life

214	202	228	187
		161
			107

Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21

Amobee revenue (US$m)	6

Focus on digitalisation

Singapore Consumer

Australia Consumer

69%

82%

42%

20%

Q1FY20

Q2FY20

Q3FY20

Q4FY20

Q1FY21

Q2FY21

Q1FY20

Q2FY20

Q3FY20

Q4FY20

Q1FY21

Q2FY21

% of online sales transactions

% of self-help transactions

% of online sales transactions

% of self-help transactions

Dash mobile wallet

H1FY21: Up 3x YoY

Q2FY20

Q3FY20

Q4FY20

Q1FY21

Q2FY21

Transaction value (S$)

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A 5G Future

Game changer for smart cities & living

Ultra-fast speeds	Massive connectivity	Low latency

Enable innovative platforms, applications & services

ManufacturingTransport Energy & utilities Healthcare Media & entertainment

Ascending the 5G value chain
Co-create enterprise applications	Successful commercial trial	Broke Australia record for
		platform	>20k Singapore	commercial 5G speeds
		>2.5Gbps Speed
		Singtel Mobile Edge	5G Postpaid	Download
		Computing (MEC)	customers in

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Financial position

Balance Sheet1

S$12.7b

32.1%

2.3x

	Free cash flow		S$1.7b
	(S$m)		 14%
		1,993
Net debt1	Singapore	346	1,705
		323	Singapore
	Australia	550	 S$23m
	332	Australia
Net debt gearing2
		 S$218m
Net debt: EBITDA & share of				Associates' dividends
associates' pre-tax profits	Associates	1,097	1,051
				 S$46m

H1FY20H1FY21

1. Gross debt less cash and bank balances adjusted for related hedging balances.

2. The ratio of net debt to net capitalisation. Net capitalisation is the aggregate of net debt, shareholders' funds and minority interests.

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Agenda

1. H1FY21 overview
2. Business units
3. Outlook & dividend
4. Supplementary information

Singapore Consumer

S$m

Revenue

EBITDA

S$m

Revenue

EBITDA

 15%

• 19%

1,081	871		 14% ( 20% ex JSS)		466
		406
		379	326				 2% (	10% ex JSS)
				162	164
H1FY20	H1FY21	H1FY20	H1FY21	Q1FY21	Q2FY21	Q1FY21	Q2FY21

H1 Sep 2020 (YoY)

• Declines in roaming, prepaid customers (foreign workers & tourists) & equipment sales due to COVID-19
• Continued voice erosion
• EBITDA impacted by declines in revenue, particularly higher-margin roaming revenue

Q2 Sep 2020 (QoQ)

• Mobile service revenue recovery since July with pickup in prepaid top-ups
• Handset sales rose on higher demand with easing of lockdown
• Ex-JSS,EBITDA up on revenue pickup

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Australia Consumer

A$m

Revenue

EBITDA

• 11% ( 10% ex NBN1)

3,857	3,427
		 31%( 32% ex NBN1)
		1,333
			924
H1FY20	H1FY21	H1FY20		H1FY21

H1 Sep 2020 (YoY)

1. • Weaker customer spending, reduced prepaid & roaming revenue & fee income from customer support measures2
   • Decline in handset sales volume & increased mix of lower- priced devices
   • NBN migration revenue tapering off with near completion of network rollout
   • EBITDA down on lower equipment margin & fixed margin erosion with NBN resale
2. NBN migrations revenue HY1FY20 A$284m, H1FY21 A$209m, Q1FY21 A$108m & Q2FY21 A$101m.
3. Includes waiver of late payment fee for all customers and free credits for health care workers.

A$m

Revenue

EBITDA

Stable (Stable ex NBN1)

1,717 1,710

 9% ( 15% ex NBN1)

441483

Q1FY21 Q2FY21 Q1FY21 Q2FY21

Q2 Sep 2020 (QoQ)

• Mobile Service revenue increased, with Optus Choice Plans driving higher ARPU
• Continued competition in fixed space & shift towards lower-priced devices
• EBITDA in Q1 was heavily impacted by COVID support measures2

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Group Enterprise

S$m	Revenue	EBITDA	S$m	Revenue		EBITDA
2,931	 3%				 7%
2,857		1,378	1,480
Carriage 1,519	1,335	 12%	Carriage	658	676	 3%

ICT	1,413	1,522	 8%	 7% ( 14% ex JSS)	ICT	719	803	 12%	 7% ( 16% ex JSS)
750
			806				363	387
	H1FY20	H1FY21	H1FY20	H1FY21		Q1FY21	Q2FY21	Q1FY21	Q2FY21

H1 Sep 2020 (YoY)

• Robust ICT performance led by:

o Broad based growth across NCS' business lines o Asia Pacific cyber security & cloud services

o Growing data centre demand

• Offset by carriage competition & COVID-driven declines in roaming & equipment sales
• Lower EBITDA due to carriage, partly offset by wage credits

Q2 Sep 2020 (QoQ)

• Robust ICT growth in Singapore & Australia
• Australia ICT revenue boosted by demand for collaboration tools & equipment to support work from home arrangements
• Increase in carriage due to stronger handset sales
• Ex JSS, EBITDA up 16% on stronger revenue

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Group Digital Life

S$m

Revenue

EBITDA

	 30%
590
	414
				58%	( 57% ex JSS)
		-36		-15
H1FY20	H1FY21	H1FY20		H1FY21

H1 Sep 2020 (YoY)

• Revenue declined with reduction in customer advertising budgets & lower milestone-based revenue from iTV
• EBITDA losses narrowed due to de-consolidation of
  HOOQ

S$m

Revenue

EBITDA

71%

261

153				 N.M
			3
		-18
Q1FY21	Q2FY21	Q1FY21		Q2FY21

Q2 Sep 2020 (QoQ)

• Revenue increased as economic activity slowly resumed
• EBITDA turned positive with revenue growth & cost measures to manage the impact of business slowdown

Business highlights

• DataSpark supported public health & transport initiatives to fight COVID-19, leveraging its population-wide mobility insights

• Amobee named a "Leader" in Gartner's Magic Quadrant for Ad Tech for 2020

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Regional Associates

Half year	PBT 1	%Change	%Change		Highlights
September 2020	(S$m)	(S$)	(constant ccy)
Regional Associates	833	11%	11%	• Improved Airtel financial performance offset COVID
	driven weakness & competition in other markets
Telkomsel	467	(18%)	(16%)	• Competition & accelerated decline in legacy services,
	mitigated by cost control
Airtel2	(30)	89%	88%	•	India: Robust revenue growth, underpinned by strong
India	(92)	72%	70%		4G customer momentum & up-trading ; 160m digitally-
Africa	93	(6%)	(1%)		engaged users
Others3	(14)	14%	9%	•	Africa: Sustained operating momentum offset by
BTL	(18)	40%	37%		higher fair value losses
AIS	166	(16%)	(16%)	•	Service revenue weakness
•	Higher depreciation & amortisation from network &
					spectrum investments
Intouch	48	(13%)	(13%)	•	Lower contribution from AIS
Globe	182	(10%)	(15%)	• Reduction in prepaid top-ups from weak economic
	conditions

1.	Excludes exceptional items.	15
2.	Airtel's pre-tax losses were S$274m in the prior comparative period.
3.	Includes South Asia & Others.

Agenda

1. H1FY21 overview

2. Business units

3. Outlook & dividend

4. Supplementary information

S$1.3b

S$2.2b

5.1 cents/ share

Outlook & dividend

FY21 outlook

Dividends from regional associates

Capital expenditure

(Including 5G capex)

Dividend

Interim dividend

(Payable in Jan 2021)

• Total dividends for FY21 are expected not to exceed the Group's underlying net profit
• Dividend policy to be reviewed at the end of the financial year when there is more clarity on the impact of COVID-19 pandemic on the Group's businesses

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Agenda

1. H1FY21 overview

2. Business units

3. Outlook & dividend

4. Supplementary

information

Singapore Mobile

Mobile revenue	S$475m
Revenue	Mobile customer
(S$m)	(m)

617 637

476475

Q2FY21
Average monthly smartphone	6.0GB
data usage

• 5.0GB in Jun 2020 quarter
• 5.2GB in Sep 2019 quarter

378 376

404

329

284 287

Postpaid ARPU down 25%

S$29

2.64	2.67	2.70	2.73	2.75	18k QoQ

1.62

1.59

1.58

1.54

1.48

56k QoQ

Q2FY20

Q3FY20

Q4FY20

Q1FY21

Q2FY21

Prepaid customers

Postpaid customers

Mobile service

Mobile revenue

• Roaming revenue down almost 80%
• Decline in voice usage & data excess charges

Prepaid ARPU down 22%

S$13

• Decline in tourist SIMs & foreigners
• Lower international voice & data usage

(incl mobile services, equipment sales & leasing)

19

Singapore Fixed

Consumer fixed revenue 1	S$138m
Consumer fixed revenue	Customers
(S$m)1	('000)

141	141	142
			139	138
520	520	518	526	526
Q2FY20	Q3FY20	Q4FY20	Q1FY21	Q2FY21
	Households on triple/quad services

Q2FY21
Singtel TV down 6%	S$51m
• Customer base down 3k QoQ	377k

Singtel OTT services	206k
(CAST & Singtel TV GO)

• Customer base down 11k QoQ

Residential broadband up 2%	S$65m
• Customer base up 1k QoQ	564k

1. Comprises fixed broadband, fixed voice, Singtel TV and broadband and Smart Home

equipment in the residential segments only and does not include mobile. 20

Australia Mobile

Mobile revenue								A$1,268m
Revenue								Mobile Customers
(A$m)								(m)
1,360		1,511	1,348	1,259	1,268
912
903	903
860	897

5.76

5.82

5.82

5.80

5.77

31k QoQ

3.35	3.50	3.38	3.23	3.04	196k QoQ
1.18	1.20	1.24	1.27	1.25	17k QoQ
Q2FY20	Q3FY20	Q4FY20		Q1FY21	Q2FY21
		Mobile broadband customers					Mobile service
		Prepaid customers						Mobile revenue
		Postpaid customers		(incl mobile services, equipment sales & leasing)

Q2FY21

Postpaid ARPU down 1%

A$37

• Roaming revenue down from continued covid travel restrictions

Prepaid ARPU stable

A$19

• Decline in traveller connections
• Lower ARPU for in market plans

Mobile Broadband ARPU up 10% A$21

• Driven by new tactical plans

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Australia Fixed

Retail Fixed revenue	A$364m
(A$m)	('000) Q2FY21
Revenue	Broadband Customers

$462	$498
		$350	$368	$364
$275	$265	$260	$260	$263
1,116	1,098	1,087	1,083	1,074
390	295	239	178	113
726	803	848	905	961
Q2FY20	Q3FY20	Q4FY20	Q1FY21	Q2FY21
NBN off-net	Others 1		Retail fixed revenue	ex-NBN2

Retail Fixed ARPU up 1%

• Customer base down 14k QoQ

NBN Customers up 57k QoQ

Optus Sports Customers up 40k QoQ

A$78

961k

858k

1.	Others - mainly on-net BB customers	22
2.	ex-NBN migration payments

Foreign exchange movements

	S$		Quarter1		Half year 1
	Sep 20	YoY	QoQ	Sep 20	YoY
	1 Australian Dollar2	0.9826	4.3%	5.9%	0.9553	0.7%
	1 United States Dollar3	1.3807	0.4%	(2.2%)	1.3927	1.7%
	Indonesian Rupiah	10,638	(3.2%)	(1.1%)	10,638	(2.1%)
	Indian Rupee	54.1	(5.5%)	(0.6%)	54.1	(6.1%)
	Thai Baht	22.8	(2.2%)	(0.9%)	22.7	**
	Philippine Peso	35.6	5.3%	0.3%	35.7	5.8%
1. Average exchange rates for the quarter and half year ended 30 September 2020. Percentage denotes appreciation/ (depreciation) against the Singapore dollar.
2. Average A$ rate for translation of Optus' operating revenue.					23
3. Average US$ rate for translation of Trustwave and Amobee's operating revenue.
** - Denotes less than +/- 0.05%

Summary Income Statement

(S$m)		Half year
Sep 20	Sep 19	YoY%
Operating revenue	7,425	8,265	(10%)
EBITDA	1,903	2,345	(19%)
- margin	25.6%	28.4%	-
EBIT (ex-associates)	596	1,060	(44%)
Associates pre-tax earnings1	885	801	11%
Depreciation & amortisation	(1,308)	(1,286)	(2%)
Net finance expense	(204)	(33)	@
Tax	(438)	(529)	17%
Underlying net profit	837	1,312	(36%)
Exceptional Items (post tax)	(371)	(1,439)	74%
Net profit after tax	466	(127)	N.M.

1. Excludes exceptional items.
@ - more than +/- 500%	24
N.M. -not meaningful

Trends in constant currency terms1

Half year September 2020	H1FY21	YoY % Change	YoY % Change
(reported S$m)	(reported S$)	(at constant currency S$)
Group revenue	7,425	(10.2%)	(10.6%)
Group reported NPAT	466	N.M.	N.M.
Group underlying NPAT	837	(36.2%)	(36.6%)
Optus revenue	3,883	(8.2%)	(8.8%)
Regional associates pre-tax earnings2	833	11.2%	10.6%

1.	Assuming constant exchange rates from corresponding period in FY2020.	25
2.	The Group's share of associates' earnings before exceptionals.
N.M. -not meaningful

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