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The SingTel Group's results for the quarter and year ended 31 March 2003
08 May 2003

Net profit for the quarter up 72 per cent

Contributions from associates cross S$1 billion mark for the year

Singapore, 8 May 2003 - Singapore Telecommunications Limited (SingTel) today announced its unaudited results for the quarter and the year ended 31 March 2003. 


Year ended: Mar 2003
(S$ million)
Mar 2002
(S$ million)
Operating revenue 10,259 7,269 41%
Operational EBITDA 3,743 3,057 22%
Associates and joint ventures 1,032 241 329%
Earnings before interest, tax, depreciation and amortisation (EBITDA)* 5,112 3,635 41%
Net profit after tax (pre-goodwill) 2,033 1,984 2.5%
Net profit after tax 1,401 1,631 (14%)
Quarter ended: Mar 2003
(S$ million)
Mar 2002
(S$ million)
Operating revenue 2,729 2,394 14%
Operational EBITDA 952 855 11%
Associates and joint ventures 275 (0.7) n.m.
Earnings before interest, tax, depreciation and amortisation (EBITDA)* 1,311 938 40%
Net profit after tax (pre-goodwill) 461 350 32%
Net profit after tax 313 182 72%

*  including IDA compensation and share of results from associated and joint venture companies

Results for the year ended 31 March 2003

For the first time in its history, the SingTel Group brought in more than S$10 billion in revenue during the financial year.  EBITDA was S$5.11 billion while net profit after tax (pre-goodwill) amounted to S$2.03 billion.

Mr Lee Hsien Yang, SingTel’s President and CEO, said: “At the beginning of the last financial year, we made a commitment to investors to focus on execution and improve returns on the Group’s existing businesses.

"I am delighted to report that our results for the year exceeded all of our key objectives.  Our Singapore business continued its excellent track record of cash flow generation, while our international expansion strategy is delivering strong profitable growth from Optus and our associates."

For the year, SingTel (ex C2C) generated S$1.8 billion of free cash flow [2] , exceeding its target of S$1 billion.  Capital expenditure (ex C2C) for the year was S$370 million, well below the original guidance.

In Australia, the key objective was for SingTel Optus to be cash flow positive in FY 2004.  Optus met this target 12 months early and generated a net cash surplus of A$281 million during the year.  It also reported a net profit of A$28 million before exceptional tax items.

SingTel had a target to double the earnings contributions from its associates and joint ventures.  This was exceeded with its share of results increasing almost four times for the year to S$1.03 billion.

Reflecting the growing importance of the Group's international business, proportionate revenues from outside Singapore accounted for 65 per cent of Group revenue (FY02: 49 per cent), while 51 per cent of proportionate EBITDA came from overseas (FY02: 28 per cent).

Results for the quarter ended 31 March 2003

Despite challenging economic and market conditions, the Group's revenue for the quarter rose 14 per cent to S$2.73 billion.  Operational EBITDA also increased by a strong 11 per cent to S$952 million.  Substantial improvements in Optus' margins and the impact of a stronger Australian dollar mitigated margin declines in the Singapore business.

Group EBITDA grew 40 per cent to S$1.31 billion on the back of solid results from Optus and regional associates.  Net profit after tax likewise increased by 32 per cent to S$461 million, pre-goodwill, and by 72 per cent to S$313 million, post-goodwill.  This was despite the negative impact of some non-recurring items.

Following a review of the carrying value of its assets, the Group wrote down an amount approximating the full cost of its equity investment in C2C.  After offsetting lease income relating to a forfeiture of rights of service and minority interests, the net impact was S$348 million.

In this quarter, the Group recognised benefits from changes to Australian tax legislation, amounting to S$325 million.  The Group also reinstated equity accounting for the results of its Indonesian fixed line joint venture, PT Bukaka SingTel International (BSI), in view of the latter's much improved operating and financial risk profile. 

Following the Asian financial crisis, SingTel fully provided for its investment in BSI in 1998.  The reversal of this provision and the recognition of share of BSI's pre-tax profits from 1998 to 2001 totalled S$110 million.

Other non-recurring items relating to impairment reviews carried out on long term investments, and certain property, plant and equipment, amounted to S$200 million.  The net impact from non-recurring items was a S$113 million reduction in the Group's net profit for the fourth quarter.


The Group generated free cash flow of S$2.1 billion during the financial year.  Given the very strong cash flow generation, the Board of Directors has recommended that the dividend be maintained at 5.5 cents per share. 

Total gross dividend payment based on existing shares will be S$980 million, giving a payout ratio of 48 per cent [3] .  This is slightly higher than the Group's normal payout ratio of 30 to 45 per cent of its earnings, reflecting Management's confidence in future prospects.

Operating results in Singapore

Despite unexpected weakness in the Singapore economy, SingTel managed to defend its margins, by keeping a tight rein on costs, and delivered an operational EBITDA margin of 51 per cent for the year.  Revenue for the year was S$4.73 billion, a decline of 3.9 per cent.

SingTel's results for the fourth quarter were broadly in line with the trends reported in the preceding quarter.  Revenue declined by 3.0 per cent year on year to S$1.18 billion as revenue from Data and Internet [4] and International Telephone services fell.

A difficult bandwidth market drove revenue from Data and Internet services down by 11 per cent year on year to S$274 million during the quarter.  Although volume demand for bandwidth grew more than 50 per cent, this was mostly due to migration by customers to larger bandwidth circuits, which have lower unit prices.

The number of SingTel broadband lines increased to 162,000, a 122 per cent increase compared to a year ago.  Broadband revenue for the quarter similarly rose 121 per cent to S$35 million.

SingTel had 1.55 million mobile customers as at 31 March 2003, an increase of 5.5 per cent.  Mobile communications revenue for the quarter increased 3.3 per cent to S$203 million even though subscriber acquisition costs decreased 4.5 per cent year on year. 

A strong focus on customer retention ensured that postpaid churn remained at an industry low of 1.6 per cent per month.  Data services constituted 16 per cent of mobile ARPU, up from 10 per cent a year ago.

Revenue from International Telephone services declined 14 per cent for the quarter to S$206 million, as the number of international outgoing minutes fell 11 per cent.  Compared to the preceding quarter, revenue was unchanged and outgoing traffic increased 3.3 per cent.  The average collection rate was stable throughout the year at 54 cents a minute.

For the quarter, revenue from IT & Engineering services rose 26 per cent to S$192 million, partly due to the acquisition of IPACS.  Excluding this, revenue growth was still a healthy 5.7 per cent, reflecting continued growth of the National Computer Systems business.  This segment is now SingTel’s fourth largest revenue contributor, accounting for 16 per cent of revenue compared to 12 per cent a year ago. 

Operating expenses increased 5.2 per cent year on year to S$647 million.  Cost of sales increased by 40 per cent due to the IPACS acquisition and growth in demand for IT & Engineering services.  Traffic expenses decreased 15 per cent with lower outgoing international traffic and lower outpayment rates.  Staff costs fell 9.0 per cent due to lower bonus provisions this year, and higher leave and gratuity provisions last year.

Operating results in Australia

2003 was a breakthrough year for Optus – delivering its first profit under Singapore GAAP and becoming strongly cash flow positive for the first time in its history.

Net profit (before an exceptional tax credit of A$308 million) for the year was A$28 million – a A$430 million turnaround on last year.

Revenue for the year was up 15 per cent – more than three times the market -- while costs were held to 8.3 per cent.  With the exceptional tax gain, net profit was A$336 million compared with a loss of A$402 million last year.

“It is a very significant result,” Optus Chief Executive, Mr Chris Anderson said.

“The ambitious platform for growth and increased market share we set ourselves plus focus on managing costs and cash have paid off.

“We are cash flow positive a year ahead of our stated aim and we are profitable,” Mr Anderson said.

“We finished the year with a positive cash flow of A$281 million – compared to a A$1 billion net funding requirement last year.  Capital expenditure as a proportion of revenue was almost halved.

“Operating revenue for the quarter is up 21 per cent to A$1.5 billion.  This is the fourth successive quarter of improvements in top line revenue growth and profitability,” he said.

For the year as a whole, operational EBITDA rose 45 per cent to A$1.35 billion.  Margins were 24.3 per cent – almost 5 percentage points higher than last year.  Significantly, Consumer & Multimedia is EBITDA positive for the year.

In 2003, Optus capitalised on the first full year of SingTel ownership to transform its profitability and cash generation capability.

“The combination of secure, experienced and well-capitalised owners and membership of the SingTel group with Optus’ proven capacity for growth through a challenger approach has positioned us extremely well for continued growth in the Australian telecoms market,” Mr Anderson said.

Optus Mobile’s profitable growth continued with revenue for the quarter up 25 per cent to A$795 million and EBITDA margins remaining strong at 36 per cent.  Mobile subscribers grew 14 per cent to 4.72 million and churn remained low at 1.5 per cent per month.

Post-paid ARPU increased by 9 per cent due to increases in minutes of use and increasing contributions from mobile data.  This was aided by lower acquisition and retention costs per subscriber, 7 per cent less than the same quarter last year.

For the fourth quarter, mobile data services contributed 14 per cent of the division’s service revenue. 

Optus Business achieved double digit revenue growth of 13 per cent, compared to the same quarter last year, to A$264 million.  In Optus Wholesale, the stabilising of wholesale revenues in recent quarters was achieved by offering higher margin bundled solutions to customers.

A key strategy for these divisions has been to reduce reliance on the incumbent’s network when connecting new business customers.  80 per cent of new services this financial year were provided using Optus network infrastructure.

Consumer & Multimedia (CMM) ended the year with outstanding results including a positive EBITDA for the year of A$5 million representing a turnaround of A$121 million. 

The performance of CMM improved dramatically this year, with sustained operational improvements combined with a successful restructuring of the subscription television industry under the Optus-Foxtel deal.

Continued focus on high value customers led to the Division recording a 23 per cent revenue growth in the fourth quarter.  HFC revenue was up 16 per cent with ARPU from HFC customers up 13 per cent.

Associated companies

SingTel continued to report very strong results from its overseas investments.  For the year, the Group’s share of pre-tax earnings from its associates was S$1.03 billion, a fourfold increase compared to last year.

For the quarter, pre-tax contributions from associates amounted to S$275 million, or 47 per cent of the Group’s profit before tax and exceptional items.  These included pre-exceptional contributions of S$60 million (+19 per cent) from Belgacom and S$33 million from BSI.

This quarter, SingTel’s regional mobile associates – AIS, Bharti, Globe and Telkomsel – delivered S$167 million (+ 95 per cent) of ordinary profits.  Bharti recorded a profit for the first time this quarter, while Telkomsel, with its contribution of S$276 million for the year, has overtaken Belgacom to become the largest contributor to ordinary profits among the Group’s associates.

The number of mobile customers served by SingTel, Optus and associated companies in the region increased 55 per cent during the year to 35 million, the biggest subscriber base outside of China and Japan.  As at 31 March 2003, AIS (11.5 million), Globe (7.1 million) and Telkomsel (6.6 million) each had a larger customer base than the combined SingTel-Optus base of 6.3 million.

SingTel’s proportionate share of revenue from its four regional mobile associates jumped 74 per cent to S$1.90 billion.  The proportionate share of EBITDA doubled to S$931 million, while the average EBITDA margin of these businesses also improved from 39 per cent to 49 per cent. 

SingTel is receiving an increasing portion of profits from its associates in the form of dividends.  During the year, it received a total of S$272 million in cash dividends from associates including AIS, Belgacom and Telkomsel, compared to S$67 million last year.

Financial position

The Group’s financial position and balance sheet remain strong, with its credit rating one of the strongest in the region.  As given in the guidance in the last financial year, the Group’s cash flows improved substantially in this financial year due to reductions in overseas investments, C2C capital expenditure and Optus turning cash flow positive.

After paying interest and dividends, the Group generated a cash surplus of S$760 million during the year compared to a S$900 million deficit last year.  With the increase of its stake in Telkomsel and the monetisation of some investments, the Group’s net debt decreased by S$299 million to S$9.56 billion as at 31 March 2003.  This does not include proceeds from the SingPost initial public offering.

With the lower debt, net gearing was reduced to 38.0 per cent.  The average maturity of the Group’s debt is seven years and it has no new financing requirements for the current financial year.

Corporate governance

At the forthcoming Annual General Meeting (AGM) in August, SingTel will be seeking shareholders’ approval for changes to incentives for Management.

SingTel is proposing to suspend its current employees share option scheme, and replace it with a performance share plan.  The new share-based incentive will be subject to performance hurdles.  These include benchmarking SingTel’s total shareholder return against other stocks in a leading Asia Pacific telecom index.

The Group also proposes suspending the issue of options to its Board of Directors and will instead encourage them to invest half their directorship fees in SingTel shares.  Full details will be provided in the AGM circular.


The impact of the outbreak of Severe Acute Respiratory Syndrome (Sars) on the Group’s Singapore business has, thus far, not been significant.  While demand for services like Internet access and video conferencing has increased, this has been offset by declines in other areas such as mobile roaming and generally lower consumer spending.

The near term economic outlook in Singapore is challenging.  The Singapore Government recently lowered the country’s GDP forecast for 2003.  The Group’s outlook for the current financial year assumes no further material deterioration in the economic outlook since this could adversely impact the Singapore business.

For the current financial year, SingTel expects consolidated revenue and operational EBITDA to increase. 

SingTel’s medium term objective is to grow earnings at double digit levels.  Its ability to grow at these levels for the current financial year depends on economic developments in Singapore, Australia and the region.

Free cash flow for the Group should exceed S$1.6 billion in line with medium term targets.  SingTel aims to keep net debt at below two times total EBITDA.

SingTel expects the proportion of earnings from associates (excluding exceptional items) to continue to grow in the medium term.  The strategic focus of the Group is on execution and maximising the value of existing businesses and its regional franchise.  This includes reviewing opportunities to increase shareholdings in existing associates.

Please refer to the Group’s Management Discussion and Analysis document for a full commentary on the Group’s outlook for the current financial year.


Mr Lee said: “The SingTel Group has had a good year.  While revenue growth in Singapore was impacted by the local economic conditions, cash flow performance was strong.

“Our international investments continued to perform strongly and they have transformed our financial and business profile.  Optus is now profitable at the bottom line and is cash flow positive, while our regional mobile associates are growing rapidly.

“The success of our international expansion strategy means that the Group is now well diversified geographically and in terms of its business mix.  As a result, we are well positioned for above average growth despite the challenging outlook for the Singapore economy. 

“Ultimately, SingTel is delivering on its commitment to create value for its shareholders.”

Media contacts:

Ivan Tan
Phone: +65-68382007 or
E-mail: ivantan@singtel.com

Stephen Woodhill
Phone: +61-2-93427850 or
E-mail: stephen.woodhill@optus.com.au

[1] Includes only six months of contributions from Optus

[2] Operating cash less cash capex and before interest, dividends and investments

[3] Based on pre-goodwill net profit.

[4] Previously known as Private Data and Public Networks