Financial results presentation Q2 FY04: quarter ended 30 September - - PowerPoint PPT Presentation

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Financial results presentation Q2 FY04: quarter ended 30 September - - PowerPoint PPT Presentation

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Financial results presentation Q2 FY04: quarter ended 30 September 2003 6 November 2003 Forward looking statements - important note The following presentation contains forward looking statements by the management of Singapore Telecommunications

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SLIDE 1

Financial results presentation

Q2 FY04: quarter ended 30 September 2003

6 November 2003

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SLIDE 2

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that could cause actual results, performance or events to differ materially from those in the statements as originally made.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.

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SLIDE 3

Asia’s leading communications company

Lee Hsien Yang

President & Chief Executive Officer

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SLIDE 4

Q2 FY04 NPAT pre-goodwill: up 10%

On track for full year goals

SingTel – cash flow engine $Xbn Operational EBITDA margin Free cash flow* $418m 51% Strong revenue growth (A$) Optus – challenger focused on returns Operational EBITDA margin 20% 29%

* Operating cash less cash capex

Group performance

  • n track

NPAT pre-goodwill Group free cash flow* $636m 252% Regional mobile associates earnings** Regional mobile associates – earnings driver Regional mobile customers up 49% 83%

** Excluding exceptionals

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SLIDE 5

Successful transformation continues

Executing our strategy

**Subject to market conditions

Belgacom IPO planned Proportionate EBITDA generated outside Singapore 63% Globe stake increased 42.7% 2004**

26% Proportionate EBITDA*

Optus Regional mobile Others SingTel

Q2 FY03 Q3 FY03 Q4 FY03 Q1 FY04 Q2 FY04 Proportionate EBITDA ($ 1,319

* Excluding SingPost / SYP

m) 1,663

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SLIDE 6

Group Q2 results – NPAT pre-goodwill $636m

Operating revenue

Increase/ (decrease) %

13% 16%

3 months to Sep 02

2,462 37.5% 924 Associates - ordinary 78% 181 2,849 36.5% 1,040 321 Associates - exceptional N/m 207 (20) EBITDA* 2% 1,396 1,426

Statutory results ($m) 3 months to Sep 03

Operational EBITDA Operational EBITDA margin N/m EBITDA* – excl associates’ exceptionals 1,446 1,189 22% Exceptional items - corporate NPAT pre-goodwill (41%) 10% 577 (38) 636 (22) NPAT 14% 473 415

* Operational EBITDA+IDA compensation+share of results of associates

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SLIDE 7

H1 FY04 results – trends similar to Q2 FY04

NPAT pre-goodwill up 80% to $2bn including exceptionals

Statutory results ($m) 6 months to Sep 03 6 months to Sep 02 Increase %

Operating revenue 18% 5,810 4,924 Operational EBITDA 12% NPAT Operational EBITDA margin 111% N/m 792 37.6% 1,850 37.6% 2,074 35.7%

  • excluding C1 defence contract

36.9% N/m 635 Associates - ordinary 320 99% N/m Associates - exceptional (43) 230 EBITDA* 2,834 2,568 10% EBITDA* – excl associates’ exceptionals 2,877 2,339 23% Exceptional items - corporate NPAT pre-goodwill N/m 80% 1,111 (75) 1,996 681 1,670

* Operational EBITDA + IDA compensation + share of results of associates

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SLIDE 8

SingTel

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SLIDE 9

SingTel: Q2 results

Impacted by sale of SingPost and directory business

507

Operational EBITDA margin Operational EBITDA Operating revenue

(Decrease) % SingTel (ex-Optus) ($m) (504)

Operating expenses

(17%) (13%) (15%) 51% N/m Trend excl SYP & SingPost (7%) (2%) (11%) N/m 614 (577) 52% 3 months to Sep 03 3 months to Sep 02 1,003 1,183

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SLIDE 10

SingTel Q2 revenue stabilising vs Q1

China IT impacted by SARS Modest growth in core business IT & Engineering services IT revenue 6% Market share Collection rate per minute International Telephone Int’l Telephone revenue 16%

14% 77% 8%

** Excludes paging and aeronautical & maritime

Mobile revenue Mobile** Lowest ever postpaid churn

2% 1.2%

Broadband lines growth ILC prices* Data & Internet Data & Internet revenue

109% 6% 63%

* ILC price per circuit (>45mbps)

Q2 FY04 vs Q2 FY03

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SLIDE 11

SingTel: operational EBITDA margin 51%

Operating cost breakdown Q2 FY04

Others 21% Staff 31% Traffic 24% Selling & admin 24%

Opex down

Total opex* Traffic expenses* 15% Staff costs* 1.6% Selling & admin expenses* 1.6% 13%

* Excluding SingPost, SYP and IPACS

2.8%

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SLIDE 12

SingTel: strong free cash flow

Tax Free cash flow* Cash capex

  • Op. cash before interest

Other dividends Cash from operations

Strong growth in free cash flow

* Operating cash less cash capex

(231) (200) 111 418 (189) (85) 300 503 42 171 488 421 Q2 FY03 Q2 FY04 ($m) 277% SingPost special dividend 110

Capex declines with completion of C2C

SingTel cash capex $m 189 85 Q2 FY04 Q2 FY03 Other capex C2C capex

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SLIDE 13

Optus

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SLIDE 14

Optus: good progress toward FY04 targets

Operational EBITDA margin increases to 29%*

Operational EBITDA margin* increases to 29%

Q2 FY03 Q2 FY04 24% 29% Operational EBITDA margin

* excludes C1 Defence contract

Q2 FY03 Q2 FY04 88*

NPAT turnaround: A$122m*

Net profit after tax (A$m) (34)

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SLIDE 15

Optus: strong double digit revenue growth

6% sequential revenue growth*

3 months to Sep 03 3 months to Sep 02 Statutory results (A$m) 20% % Increase 92 212 44% 38% 18% Trend ex C1 43% 37% 29% 127% 129%

Operating revenue

1,601 1,330 462 322

Operational EBITDA

29% 24%

Operational EBITDA margin

334 461

EBITDA EBIT

(34)

NPAT

90

* Q2 FY04 vs Q1 FY04 excluding C1 Defence contract

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Optus: EBITDA growth across all divisions

Fixed line margins improve Q2 FY04 vs Q2 FY03

Mobile 38% Operational EBITDA margin 25% Business & Wholesale* Consumer 12%

* excludes C1 Defence contract

21%

  • 5%

** compared to Q2 FY03

All divisions contributing to Operational EBITDA growth

57 Mobile Operational EBITDA Q2 FY04 Optus 140 22 Business & Wholesale 61 Consumer 462 323 94 45 Contribution Growth** A$m A$m

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Optus Mobile: total revenues up 21% to A$843m

Operational EBITDA margin maintained at 38%

Double digit growth in service revenues sustained

Q2 FY03

19%

764 Mobile service revenue (A$m) Q2 FY04 642

Post-paid MOU

5%

Over 5m customers

17%

Data as % of service revenues

14%

Post-paid ARPU

8%

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SLIDE 18

Optus Business and Wholesale

Combined Business & Wholesale revenues up 5% to A$362m*

Corporate voice revenues Combined Business & Wholesale EBITDA margin*

25%

Wholesale revenues

8% 16%

238

Underlying corporate revenues up 4%*

Underlying corporate revenues Optus Business revenue (A$m) Q2 FY03 Q2 FY04

* Excludes C1 Defence contract

C1 Defence contract 249 34

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SLIDE 19

Focus on high value customers maintained

Optus Consumer: sustainable positive cashflow

* Local telephony plus dial-up internet

Total revenues up 24%

HFC revenues Off network local telephony customers on bundled plans*

33%

Off network voice and internet revenues

11% 38%

Cash flow** (A$m)

Margin expansion drives A$73m cash flow turnaround

Q2 FY03 Q2 FY04 24

** Operational EBITDA less cash capex

Q1 FY04 Q4 FY03 Q3 FY03 EBITDA margin (49)

12%

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SLIDE 20

Optus: strong trend of cash flow growth

Free cash flow* up 167% to A$302m…

Q2 FY03 Q2 FY04 113 302 Free cash flow* (A$m)

** excludes C1 Defence contract

…delivered by growth and capital management

Operating cash Cash capex Cash capex : revenue**

67% A$157m 10%

* Operating cash less cash capex

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SLIDE 21

Associates

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SLIDE 22

Regional mobile associates: customers up 49%

Total mobile base including SingTel & Optus : 41m customers

83%

Regional mobile earnings up 83%*

221 (4%) 22 Globe Regional Mobile 75% 118 Telkomsel N/m 14 Bharti

3 months to Sep 2003 Increase %

87% 68 AIS

($m)

* Exclude exceptionals

Rapid growth of customer base

+49%

Bharti AIS Globe Telkomsel Aggregate mobile subscribers Sep 02 Sep 03 23m 34m

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SLIDE 23

Associates : profit & dividend growth

221 89 Regional Mobile 3 mths to Sep 03 ($m) Belgacom 10

Associates contribution (before exceptionals)

(22) 301 Total N/m (20) Exceptionals Total Increase/ (decrease) % 48 (5) Other* 78 321 6 N/m

Ordinary dividends up four times

$171m

Dividends received ($m) Q2 FY02 281 Q2 FY04

SingPost Telkomsel AIS BSI & others

Q2 FY03 43 3

SingPost special dividend $110m

78%

83 N/m Singapore Post BSI (Bukaka SingTel) N/m

* Including Optus associates

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SLIDE 24

SingTel: strong track record as an investor

SingTel's cost of investment Market value @ 31 Oct 03

1.6 1.6 1.8

Regional mobile associates trading at premium to cost

Globe** 1993 AIS 1999 Bharti 2000 Telkomsel 2001 1.9

** Based on 42.7% stake

Substantial gains on disposals

950 SC&C* Cam & Yorks Cable AAPT Netcom Yellow Pages SingPost 705 2003 1996-1999

* Shinawatra Communications and Computers

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SLIDE 25

S P E C I M E N

Cash flow balance sheet and outlook

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SLIDE 26

Group free cash flow*: up 252%

Group free cash flow* $m

Stronger cash flows from international expansion

Optus SingTel

* Operating cash less cash capex

+ 252% Assoc dividends 217 763

** Excluding finance lease repayments

Modest reduction in net debt

(102) (97) Interest** 217 763 Group FCF* Q2 FY03 Q2 FY04 $ million

*** Including purchase of short term investments, monetisation of assets, forex movements, and finance lease payments

(1,280) 139 Decrease/(increase) in net debt (767)

  • Investment in Telkomsel

(765) (765) Dividends paid 137 238 Others***

Q2 FY04 Q2 FY03

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SLIDE 27

Leverage at comfortable level

Net gearing 32% EBITDA: net interest cover Net debt: EBITDA 1.4X 14X Net interest expense down 30% Average maturity

  • f borrowings

7 years $8.1bn Net debt stabilising

Telkomsel investment and FY02 dividend payment FY03 dividend payment Jun 02 Dec 02 Mar 03 Mar 02 Sep 02

Net Debt ($bn)

9.9

  • 9. 3

10.6 10.1 9.6 8.2 Jun 03 8.1 Sep 03 SingPost/SYP proceeds

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Guidance updated for impact of first half results

Group medium term target – double digit earnings growth

  • SingTel – cashflow engine
  • Optus - challenger
  • Regional mobile – growth engine

Strategies

  • Free cash flow at least
  • Operational EBITDA

growth approximately

  • Earnings contribution

up by at least Targets - FY04

$1.5 bn

30% 50%

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SLIDE 29

Dividend and investment policy

Dividend payout ratio increases 40-50% of NPAT before goodwill and exceptionals Exceptional items – review alternative strategies Dividends

e.g. special dividends or

share buybacks

  • Focus remains on Asia
  • Strategic investments with

management influence

  • Maintain focus on execution
  • Selectively consider new

investments Investments

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SLIDE 30

Best practice corporate governance

New share-based incentive plan for management

Includes performance hurdles

SIAS awards

Best Singapore Corporate Governance Most transparent company

Asiamoney corporate governance poll

  • No. 1 Asian telecoms company
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SLIDE 31

SingTel – “Best Regional Carrier”*

Strong free cash flow** growth SingTel Free cash flow** Regional mobile customers Optus Operational EBITDA margin

29% 49% $418m

Regional mobile

252%

Solid balance sheet

** Operating cash less cash capex

Double digit earnings growth***

10%

*** NPAT before goodwill

Group

Net debt = 1.4 X EBITDA

* World Communications Awards (Oct 2003)

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Financial results presentation

Q2 FY04: quarter ended 30 September 2003

6 November 2003