SingTel - OCBC Investment 2023-05-26: Driving ROIC Growth

• SingTel (SGX:Z74)’s 2HFY23 operating revenue and EBITDA fell 4.2% and 1.7% y-o-y to S$7.4b and S$1.8b respectively, due to the absence of NBN migration revenue and contributions from Amobee, together with a 7% depreciation of the Australian dollar. On an underlying basis, operating revenue and EBIDA would have grown 5.9% and 2.8% respectively on the back of sustained roaming recovery.
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• A final dividend of S$0.053 was declared (+10.4% y-o-y). Together with the interim dividend of S$0.046 and special dividend of S$0.05, total dividend for FY23 rose 60.2% y-o-y to S$0.149 per share. See SingTel's dividend date.

Rebound in mobile service revenue

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• Optus’ operating revenue rose 4.5% y-o-y to AUD4.1m in 2HFY23, mainly driven by stronger mobile business on the back of customer growth as well as stronger prepaid and roaming revenue, but partially offset by the absence of NBN migration revenue. EBITDA was marginally down by 0.6% y-o-y to AUD1.0m due to higher operating expenses (+6.2% y-o-y).
• Separately, NCS’ operating revenue was up 15% y-o-y in 2HFY23 while EBITDA fell 6.3% y-o-y due to higher operating expenses. On a h-o-h basis, EBITDA margin improved 1.5 percentage point (ppt) to 10.0% in 2HFY23 on the back of higher operating revenue and prudent cost management. We expect continued improvement in NCS’ margin, supported by strong bookings of S$3.2b and proactive cost management.

Planning CAPEX of S$2.7b in FY24

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-05-26 SGinvestors.io

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