Singtel H2 net profit down 20.9% at S$2.2 billion; telco open to Aussie minority partner in Optus

[SINGAPORE] Singtel on Thursday (May 21) posted a net profit of S$2.2 billion for its second half ended Mar 31, down 20.9 per cent from S$2.8 billion in the year-ago period.

The stock fell as much as 3.2 per cent or S$0.16 to S$4.86 as at 9.28 am on Thursday morning following the news, with nearly 7.6 million shares changing hands.

This translated to an earnings per share (EPS) of S$0.1335, down from S$0.1656 for the second half ended March 2025.

Its earnings for the period were weighed down by, among other things, lower contributions from its joint ventures and associates, and higher expenses.

For H2, Singtel’s share of results of joint ventures and associates fell to S$1.05 billion from S$1.7 billion. This mainly comprises the share of exceptional items from Airtel, AIS, Globe Telecom and SingPost.

Operating expenses for H2 rose to S$5.6 billion, from S$5.4 billion, mainly due to investments in compliance and network resilience. Net finance expenses increased 16.6 per cent to S$195 million from S$167 million, amid foreign exchange and fair value losses.

Nevertheless, the group’s underlying net profit for the six months rose 10.6 per cent for H2, to S$1.4 billion from S$1.3 billion previously.

For the second half, revenue stood at S$7.4 billion, up 2.7 per cent on the year from S$7.2 billion.

The board proposed a final ordinary dividend of S$0.103 per share, totalling to S$1.7 billion for the financial year ended Mar 31. This consists of a S$0.07 per share core dividend and a value realisation dividend of S$0.033 per share.

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This brings its total annual dividend to a record of S$0.185 per share.

For FY2026, Singtel’s net profit rose 39.5 per cent to S$5.6 billion from S$4 billion in 2025, boosted by a S$2.84 billion net exceptional gain, mainly from Airtel stake sales. This was partly offset by various provisions largely from Australia.

Singtel’s underlying net profit climbed 12.1 per cent year on year to S$2.8 billion from S$2.5 billion, driven by growth in its regional associates Airtel and AIS, as well as operating companies NCS, Digital InfraCo and Optus.

Its full-year EPS stood at S$0.3398, up from S$0.2434 in previous financial year.

Revenue for FY2026 was largely stable, up 0.8 per cent at S$14.3 billion, from S$14.1 billion previously.

In FY2026, Singtel undertook strategic and capital management initiatives aligned with its Singtel28 objectives. These aim to position the group to develop new revenue levers, pursue new growth opportunities as well as improve its capital efficiency.

These include its purchase of ST Telemedia Global Data Centres with KKR to accelerate its digital infrastructure strategy, asset recycling that has generated S$3.9 billion, and the Singtel special discounted share transfer exercise to improve its flexibility.

In a separate statement on Thursday, Singtel said it is open to an Australian partner taking a minority stake in Optus.

Miniority shareholders of Singtel, which fully owns Optus, have been concerned over its investment in the beleaguered Australian telco, given the emergency call outage last year which resulted in fatalities.

In a media briefing in November, Singtel group CEO Yuen Kuan Moon noted that it has invested A$9 billion (S$7.7 billion) in capital expenditures at Optus over the past five years.

FY2027 outlook

Singtel plans to continue executing its Singtel28 strategy to grow its digital infrastructure and services. It is also repositioning itself as a global data centre player with some 2.8 gigawatts in design capacity.

It noted that Nxera’s 58 megawatt DC Tuas facility is almost fully contracted and “strong take-up” across its regional data centres.

Its digital services arm, NCS, is focusing on artificial intelligence acceleration across public sector, defence, homeland security, healthcare, transportation, telco and financial services.

Its near-term outlook for FY2027 is “more cautious” due to Middle East uncertainty, with earnings before interest and taxes growth forecast to be between low and mid-single digits.

With no operations in the Middle East, the group said its direct exposure to the region’s crisis is limited. However, it noted that most of its key markets are net energy importers and “susceptible to global energy price volatility”.

“While existing long-term power contracts should help mitigate this exposure, there could be second-order implications in the form of inflationary pressure resulting in higher operating costs, softer consumer and business spending and slower economic growth,” said Singtel.

“This will affect the group’s foreign exchange risk stemming from volatility in the regional currencies where it operates, further impacting translated earnings.”

The counter closed 0.8 per cent or S$0.04 higher at S$5.02 on Wednesday.