Financial results presentation Six months ended 30 September 2002 7 - - PowerPoint PPT Presentation

Financial results presentation

Six months ended 30 September 2002

7 November 2002

Forward looking statements - 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

• perations 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that could cause actual results, performance or events to differ materially from those in the statements as originally made.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. In particular, such targets should not be regarded as a forecast or projection of future performance of SingTel. It should be noted that the actual performance of SingTel may vary significantly from such targets. “$” means Singapore dollars unless otherwise indicated.

Asia’s leading communications company

Lee Hsien Yang

President & Chief Executive Officer

H1 FY03: Strong Optus results

Good progress towards full year goals

NPAT pre-goodwill

$1,111m

Group performance

• n track

Contribution from associates

$549m

Operational EBITDA margin maintained

53%

SingTel – cashflow engine Strong free cashflow generation

$577m

Strong

• perational

EBITDA growth Optus – challenger focused on returns Capex:revenue reduced

15% 38%

Strong earnings growth* Regional mobile – earnings driver Mobile customers

152% 142%

* Pre-exceptionals and tax

Positioned for faster growth

Medium term objective: double digit NPAT growth (pre-goodwill)

Revenue mix: bias to growth

30 30 31 32 36 54 54 Data & mobile revenue as % of total* TCNZ SBC Deutsche Telekom Telstra Verizon France Telecom SingTel

* Based on last reported full year results except SingTel (6 months to Sep 02) SingTel 36% Regional mobile 13% Belgacom 9% Others 4% Optus 39%

64% of proportionate revenues

• utside Singapore

Year on year comparison of statutory results

Group numbers impacted by Optus consolidation

6 months to Sep 2002 Increase/ (Decrease) % 6 months to Sep 2001

• after goodwill
• before goodwill

Profit after tax & exceptional items EBITDA* Operational EBITDA margin Operational EBITDA Operating revenue

4,924 792 1,111 2,568 38% 1,850 (32%) (8%) 53% N/m 38% 97% 1,159 1,209 1,683 54% 1,342 2,495 Statutory results (S$M)

* Operational EBITDA + IDA compensation + share of results of associated & joint venture companies

Sequential comparison of Group numbers shows bottom line improvement

* Operational EBITDA + IDA compensation + share of results of associated & joint venture companies

Statutory results (S$M) 3 months to Sep 2002 Increase/ (Decrease) %

(0.2%) 0.1%

3 months to Jun 2002

2,461 Operating revenue 2,462 926 Operational EBITDA 924 38% Operational EBITDA margin N/m 38% 1,172 EBITDA* 19% 1,396 Profit after tax & exceptional items

• before goodwill
• after goodwill

415 577 8% 377 534 10%

SingTel (ex-Optus): year on year comparison

6 months to Sep 2002 Increase/ (Decrease) % 6 months to Sep 2001 SingTel (ex-Optus) (S$m) 2,495 (4.7%) 2,379

Operating revenue

53% 54% (5.9%) (1,173)

Operating expenses

(1,131) (3.5%) 1,262 1,342

Operational EBITDA*

N/m

Operational EBITDA margin

163 1,694 (90%)

Capex (accrual basis)

*Operational EBITDA + IDA compensation + share of results of associated & joint venture companies

SingTel (ex-Optus): revenue trends

International circuits Data revenue PDPN revenues

63% 2.5%

Revenue growth Mobile revenue Declining churn

1.4% 8.5%

Market share retained International telephone International revenues

84% 17%

Healthy margins and cashflow generation at SingPost

Strong

• perational

EBITDA margin**

46%

$162M $173M $172M

Revenue*

H1 FY01 H1 FY02 H1 FY03 412 398 398 Mail volume (million units)

+

2%

Modest capex to sales ratio** Good cash generation

* Revenue – after intercompany eliminations ** Operational EBITDA margin & capex ratio for financial year ended 31 Mar 02 – before intercompany eliminations (source: SingPost statutory accounts for 31 Mar 02)

SingTel (ex-Optus): cost controls maintain margins

• No. 1 brand in Singapore

577

Strong free cash flow generation

Operating cash* Capex (cash basis – excl C2C) Free cash flow** S$m (185) 1,033

** Before interest, dividends and investments - includes impact of C2C

Dividends from associates 100

* After tax and before interest

Capex (cash basis – C2C) (371)

53% operational EBITDA margin

4% Total opex 13% Traffic expenses 5% Staff costs

Optus: clear and sustainable turnaround

Growth momentum sustained - H1 revenue up 12% year-on-year

Capex: revenue ratio continues to track below 20% Operational EBITDA margins continue to improve

H1 FY03 FY02* 29% 15% FY02* 22% 19% Q1 FY03 24% Q2 FY03

Faster top line growth Margin expansion Cashflow improvements

* FY02 revenues restated on basis consistent with FY03

Optus: 38% operational EBITDA growth

Good progress toward cashflow breakeven in FY04

6 months to Sep 2002

EBITDA

Increase/ (Decrease) % 6 months to Sep 2001 Statutory results (A$M) 596 23.1% 601 128 (5) 60% N/m 38% 12% N/m N/m 373 18.7% 435 2,318 (72) (62)

JVs

(76) N/m 398 (59%) (59%) 27% N/m 15% 5% 161% N/m Q2 FY03 vs Q1 FY03 18% (31%) (2%) 2,601

Operating revenue Operational EBITDA Operational EBITDA margin EBIT

(287)

NPAT

971

Capex (cash basis)

270

Capex (accrual basis)

654

Optus Mobile: delivering profitable growth

EBITDA margins increase to 37%

Share of revenue increases 7%

Postpaid ARPU up

H1FY02 H1FY03

19%

A$1.3bn Optus Mobile revenue

Data increases as % of revenue

10% 20%

Business mobile revenues up*

* 3 months to Sep 02 vs 3 months to Jun 02

Optus Business and Wholesale

Corporate momentum maintained

Focus on corporate market succeeding

Corporate data & IP grows

13%

H1 FY02 H1 FY03

13%

A$461m Optus Business revenue

22%

Corporate voice grows Wholesale revenues decline in difficult market

29%

Capex down 59% - sharp reduction in cash outflow*

Optus Consumer: cash efficient growth

Strong revenue growth 8%

ARPU from HFC network increases

H1 FY02 H1 FY03

21%

A$592m Optus Consumer revenue

20%

Off-network voice up

29%

Dial-up customers up

* Operational EBITDA less cash capex

Optus: sustainable cost control

Balanced with customer and staff satisfaction

Better cost management Customer and staff successes

‘Mobile Operator of the Year’ 2002 Australian Telecom Magazine Awards Optus Business customer satisfaction rating maintained No 1 ISP for customer satisfaction - AC Nielsen Top quartile of Australian companies for job satisfaction

Costs as % of revenue

25% 12% 14% 30%

Selling & Admin Staff Sep 01 Sep 02 Sep 01 Sep 02

Strong performance by associates & JVs

• Growth in profits and dividends

Strong dividend growth - $100m in H1FY03

Belgacom AIS & others Telkomsel

H1 FY03 FY 01/02 FY 00/01 Dividends received (S$m) 67m 100m 43m

Ordinary profits up 88% YoY

29% 89 AIS 85% 320 Ordinary contr. 218% 549 Total N/m 230 Exceptionals N/m (48) Others* 61% 51 Globe N/m 111 Telkomsel 7% 117 Belgacom Increase % H1 FY03 ($m)

* Includes Optus Associates

Group aggregate mobile base: 29 million*

• Regional mobile earnings: up 142%**

* Includes 5.9M SingTel and Optus subscribers ** Excludes exceptional gains/(losses) and taxes

10 20 30 40 50 60 70

2000 2003 2006

Strong growth expected in regional markets

Mobile subscribers (million)

Source: SSB India Thailand Philippines Indonesia

10 20 30 40 50 60 70 80 20 40 60 80 100

market share of subscribers % EBITDA margin %

Profitable market leaders

EBITDA margins as at Sep 02 except AIS & Telkomsel (Jun 02). Bharti margins based on existing consolidated operations. AIS adjusted for non cash charges.

Telkomsel AIS SingTel Globe Optus Bharti

Working together to create value in mobile

Data expertise shared across group Aggregate base of 29m helps supplier negotiations

2% 10% 11% 11% 37%

Data as % of revenue* Bharti Optus Telkomsel SingTel Globe

7 17 29 38 42 111

Aggregate subs** Telstra SKT SingTel & assoc. China Unicom NTT DoCoMo China Mobile

* Based on latest publicly available information ** Based on Sep 02 data except Telstra (Jun 02) & NTT Docomo (Aug 02)

Improving cashflows and strong balance sheet

* Include monetisation of short term assets & forex movements

Net gearing 42%

Progress towards leverage goals

Net debt: EBITDA ** EBITDA: net interest cover 2.2 x 9.9 x Net debt $10.6bn

** Annualised basis

$750m free cash flow – 1H FY03 (282) Interest payments (767) Telkomsel 753 Increase in net debt 310 Others* (765) Dividends paid 751

• Total

174

• Optus

577

• SingTel ex Optus

$m Free cash flow

Strong turnaround by Optus

• Good progress toward full year targets

Strong cash flow generation

Singapore business Optus Regional mobile Financial strength Strategic focus

Margin expansion & improved cashflows Strong earnings growth Strong balance sheet & cashflows Improving returns from existing businesses

Financial results presentation

Six months ended 30 September 2002

7 November 2002