As earnings season rolls on, many blue-chip companies are releasing their latest business updates and earnings.
Singtel (SGX: Z74) is one of them, and the telco also followed up its earnings release with a surprise announcement of a S$2 billion share buyback programme.
The telco’s latest announcement adds one more method to its value realisation arsenal.
Recall that Singtel had announced the payment of a value realisation dividend (VRD) for the previous fiscal year from its capital recycling activities.
Here are five things you need to know about the telco’s latest earnings report.
A solid set of earnings
Singtel reported a robust set of earnings for its fiscal 2025 (FY2025) ending 31 March 2025.
Revenue stayed flat year on year at S$14.1 billion.
Operating profit, however, rose 11.1% year on year to S$3.9 billion because of lower operating expenses and a year-on-year increase in the share of associates’ pre-tax profits.
Net profit stood at S$4 billion for FY2025 but was boosted by an exceptional gain of S$1.55 billion from the partial divestment of Comcentre.
Excluding this one-off item, Singtel’s underlying net profit would have climbed 9.3% year on year to S$2.47 billion.
The telco also generated positive free cash flow of S$2.5 billion for FY2025, registering a small 3.6% year-on-year decline.
A dip in Singapore’s market share
For Singtel’s Singapore division, operating revenue dipped by 2.1% year on year to S$3.8 billion.
Mobile service revenue remained flat, while roaming and the Internet of things revenue were offset by legacy services decline.
Operating profit remained stable year on year at S$833 million.
Singtel saw the number of Singapore mobile customers dip 2.4% year on year to 4.5 million, with the blended average revenue per user (ARPU) slipping 3.3% year on year to S$24.
Data usage continued to surge, jumping almost 20% year on year to 15 GB per month.
The telco, however, experienced slightly higher churn of 1.2% and saw its market share falling from 46.3% in FY2024 to 44.6% for FY2025.
Higher operating profits from Optus and NCS
On the flip side, both Optus (Singtel’s Australian division) and NCS posted strong results.
Optus’ revenue inched up 1% year on year to A$8.2 billion, led by a 4% year-on-year increase in mobile service revenue as postpaid subscribers paid more.
Operating profit for the division shot up 55% year on year to A$446 million, contributed by better mobile performance and improved cost management.
Over at NCS, revenue rose 5% year on year to S$2.98 billion, with Gov+ contributing to this increase.
Cost optimisation, along with higher margins, resulted in NCS reporting a 39% year-on-year increase in operating profit to S$254 million.
The division also saw robust bookings of S$3.2 billion for FY2025, up 5% year on year.
A promising guidance for FY2026
Singtel provided encouraging guidance for FY2026 and will focus on the key areas highlighted in the slide above.
In addition, the telco will continue to work on the simplification of its products and enhance system and process efficiencies.
Management expects to achieve gross savings of S$600 million before the impact of inflation.
Singtel expects to register operating profit growth in the high single digits before associates’ contributions for FY2026.
Management also reiterated its low double-digit return on invested capital (ROIC) target in the mid-term.
Value realisation: Share buybacks and dividends
To further realise value for shareholders, Singtel’s board authorised its first share buyback programme of S$2 billion as part of the group’s capital management strategy.
This programme allows for the purchase of up to 5% of Singtel’s total issued shares.
The share buybacks will be conducted over three years till FY2028, and the repurchased shares will be cancelled.
For FY2025, Singtel declared a core final dividend of S$0.067 and a final VRD of S$0.033, taking the total final dividend to S$0.10.
Together with the total interim dividend of S$0.07, Singel will pay out a FY2025 total dividend of S$0.17, higher than the previous fiscal year’s S$0.15.
Investors should note that FY2025’s total dividend comprises S$0.123 in core dividends and S$0.047 of VRD.
Meanwhile, management also raised its capital recycling pipeline target from the previous S$6 billion to S$9 billion.
The capital raised will be allocated for growth opportunities and may be used to pay down debt.
Any excess capital will be returned to shareholders via the VRD (S$0.03 to S$0.06 per year) and share buyback programme.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
