SingTel sees improved full-year growth as half-year profit rises

By John Biju and Rajasik Mukherjee

(Reuters) -Singapore Telecommunications posted a 6% rise in underlying net profit for the half-year and gave improved guidance for the full year on Wednesday, underpinned by strength at its Australia unit Optus and technology services business NCS.

Southeast Asia's largest telecoms provider also said it expects its earnings before interest and tax (EBIT) to grow at a low double-digit rate for fiscal year 2025, an improvement over earlier guidance which gave a wider range of high single-digit to low double-digit growth.

SingTel shares rose 1% to S$3.19 as at 0837 GMT.

Optus benefited from higher mobile service revenue, price increases and better cost management, while the NCS segment reported strong demand for its services, the company said.

EBIT for Optus surged 58% for the half-year while the NCS segment's EBIT jumped 40%.

"Optus is benefiting from Telstra's 4-5% (price) hike in July 2024. NCS also benefits from growth in its Gov+ and Telco+ businesses, and cost-reduction efforts," said Sachin Mittal, global head of telecom, media and tech research at DBS Bank.

Telstra, one of Australia's top telecom firms, increased prices for postpaid mobile plans in early July this year.

Near-term growth for Singtel will be driven by Optus and NCS, Mittal added. SingTel's infrastructure unit, Digital InfraCo, "will start delivering growth in 18-24 months from ramp up of data-centre capacity".

Demand for data centres has risen in recent years as firms adopt artificial intelligence to streamline operations.

"Both NCS and (SingTel's data centre brand) Nxera..... are continuing to invest in AI infrastructure and capabilities to better serve enterprise and governments," SingTel Group Chief Executive Officer Yuen Kuan Moon said.

"We will continue scaling NCS and building out Nxera's data centres, which will commence operations from mid-2025 to meet increasing demand."

The company said underlying net profit came in at S$1.19 billion ($887.99 million) for the six months ending Sept. 30.

It also declared an interim dividend of 7 Singapore cents per share, higher than the 5.2 Singapore cents per share declared a year earlier.

($1 = 1.3401 Singapore dollars)

(Reporting by John Biju, Rajasik Mukherjee and Sneha Kumar in Bengaluru; Editing by Alan Barona and Nicholas Yong)