Yahoo Finance Singtel Looks to Unlock Value: 5 Highlights from the Telco’s Annual Report 2021
Singapore’s telcos have had a tough run.
They have been besieged by a litany of woes ranging from declining voice and data revenue and lower average revenue per user (ARPU).
The two listed telcos here, Singtel (SGX: Z74) and StarHub (SGX: CC3) have reported tumbling revenue and net profit.
StarHub’s fiscal 2021 first quarter saw total revenue dip by 3.8% year on year while net profit fell by 24% year on year.
Singtel also saw its fiscal year 2021’s (FY2021) underlying net profit plunging 30% year on year.
If impairments are included, the telco would have recorded its lowest net profit in 23 years.
The good news is that Singtel is aware of the problems and has committed to a strategic review.
CEO Yuan Kuan Moon believes that this move is necessary to realign the business and set it back on the path of growth.
Singtel released its FY2021 annual report recently which contained more details of this strategic reset. Here are five highlights that investors should know.
1. Growing its 5G market share
Anna Yip, CEO of the Singapore Consumer division, provides more details on Singtel’s 5G implementation.
The telco launched its 5G offering within four months of receiving its licence, achieving a speed of 1.2 GB per second and extending its indoor coverage.
Just two months ago, Singtel unveiled Singapore’s first 5G standalone network, offering selected customers the chance to experience speeds that are 10x faster than 4G networks.
In addition, lag was also significantly reduced and the new network incorporated new security designs that boosted service and network security.
Management will continue to drive 5G adoption by demonstrating how the faster network can enhance customers’ work and play experiences through augmented reality, virtual reality and video applications.
2. Building 5G infrastructure and capabilities
Singtel is moving quickly to build up its 5G infrastructure to not only provide retail customers with enhanced security features but also enterprise (read: corporate) customers as well.
The group has developed GENIE, the world’s first portable 5G platform that enables companies to trial use cases in a secure manner.
This new investment complements Singtel’s 5G Garage, which allows companies to incubate ideas and co-create solutions for 5G for their customers.
To further grow its 5G capabilities, Singtel is searching for partners to help experiment, trial, tweak and co-create new applications and services to present to customers.
3. Deepening digitalisation
Singtel is witnessing increased demand for its digital services, with digital adoption at an all-time high due to the pandemic.
43% of all sales transactions were completed online and 70% of interactions were settled through self-help channels.
This increased engagement through digital channels is beneficial for the telco as it helps to reduce manpower costs and allows for resources to be channelled elsewhere.
During the financial year, Singtel also partnered with leading insurance providers to offer a range of products through digital channels.
This partnership culminated in the successful launch of the telco’s flexible insurance savings product, Dash PET (Protect, Earn, Transact).
4. Turning NCS into a digital B2B champion
Singtel’s unit, NCS, has done well for the fiscal year and is poised to introduce a new strategy to transform the business into a leading business-to-business (B2B) digital and technology services company.
NCS will form specialised teams to focus on clients in verticals such as Public Sector and Media & Technology, to name a few.
Apart from this segregation, the unit will also introduce two new strategic business groups for the government and telco sectors to garner more business from corporations in those industries.
Staffed with 9,600 employees, NCS is also building partnerships to gain access to new markets and niche digital capabilities.
As an example, NCS acquired digital consultancy firm 2359 Media last year and also integrated DataSpark, a telco-centric data science and engineering firm.
Both companies brought about capabilities and expertise that helped to broaden NCS’ slate of offerings to customers.
5. Leverage quality infrastructure assets
Singtel currently has a portfolio of digital infrastructure assets spread across Asia.
These assets include mobile towers, data centres, fibre cables and satellites.
Due to COVID-19, the inherent value of these assets has increased due to the appeal of digital infrastructure assets.
The group intends to monetise some of these assets in a bid to recycle capital into next-generation infrastructure and technologies.
One such initiative is the planned divestment of Optus’ mobile towers.
Singtel may conduct more of such capital recycling in future to ensure it retires legacy assets and invests in newer, sustainable infrastructure to grow its business to the next level.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
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