Dear Shareholders,
It has been a year of recovery and progress despite uncertainties in the macroeconomic environment. The lifting of travel restrictions around the world sounded an official end to COVID-19 and its profound disruptions. This set the scene for a broad-based economic recovery and the return of international travel. Against this backdrop, our business has come back strong, while we pivoted assertively into new areas of growth, as economies continue to undergo rapid digitalisation. Our FY2023 net profit grew 14% to S$2.23 billion, allowing us to make a total dividend payout of 14.9 cents per share.
Reinvigorating our core business
As economies around the world roared back to life and companies accelerated their digital transformation post-pandemic, we were well-positioned to capture the tailwinds of digitalisation and positive upside. Mobile growth across Singapore and Australia returned, with a similar trend experienced by our regional associates, particularly Airtel in India. Add to this the growth of our ICT business – our core businesses saw a strong 15% EBIT growth.
Our 5G leadership helped to reinvigorate our core businesses – a key reason why we were voted the strongest brand in Singapore for the second straight year and the sixth strongest telco brand globally by Brand Finance. In Singapore, we achieved standalone 5G nationwide coverage, three years ahead of regulatory targets, effectively making Singapore the first country in the world to be fully covered by this next-generation wireless technology. Hitting this critical milestone has given us a head start in commercialising 5G. Not only are our customers enjoying faster speeds and better connectivity when using their mobile devices, we have begun helping enterprises to innovate and grow by exploiting the full capabilities and best applications that 5G can offer. Importantly, with our 5G infrastructure in place, Singapore can step confidently into its next phase of growth as a global smart nation. In Australia, Optus has switched on its 3,000th 5G site this year as it expands its national 5G coverage, while establishing the fastest mobile speeds in the country for the third year running.
Restructuring for growth
Consistent with our ongoing strategic reset, we further reorganised our structure to reposition the Group for growth. In Singapore, we consolidated our consumer and enterprise businesses into a single operating unit to drive synergies, productivity and cost savings at the country level. This follows a similar move in 2022, when we transferred the management of Optus Enterprise to Australia, effectively giving Optus more operational autonomy to respond to market changes and compete more effectively. We’ve recently established a standalone infrastructure unit called Digital InfraCo to better unlock the latent value of our portfolio of quality assets that includes our regional data centre business, our carrier businesses in subsea cable and satellite, as well as Paragon, our all-in-one platform for 5G MEC and cloud orchestration.
This restructuring began in 2021 when our ICT arm NCS was empowered to accelerate its expansion into Asia-Pacific as an autonomous business unit. NCS has since expanded and regionalised with a 12,000-strong workforce, a footprint that extends to Australia and sales bookings of some S$3.2 billion.
We believe these moves will accelerate the Group’s pace of growth, particularly in areas where we have a right to play. The Digital InfraCo, for instance, will build on our portfolio of data centres in Singapore with new data centres in Thailand and Indonesia coming online by 2025. Together with a 58MW project at Tuas in Singapore, the new builds will more than double our capacity to 155MW in the next three years.
Recycling capital to invest in growth
Besides reinvigorating our core and developing new growth engines, we embarked on a series of capital management initiatives to rebalance and optimise our associates’ portfolios. We increased our stake in AIS’ parent company Intouch Holdings to 24.99% for S$330 million, demonstrating our confidence in AIS’ potential to build on its position as the mobile operator of choice in Thailand and become the leader in digital and enterprise services. Another key initiative was the divestment of a 3.3% stake in Airtel in India which unlocked S$2.5 billion for the Group. This has helped to fully fund our 5G needs in Singapore, while allowing us to grow other new businesses. We recently supported our Indonesian partner Telkom, as it embarked on a process to integrate its fixed broadband business Indihome into Telkomsel.
We see this as a rare opportunity for Telkomsel to tap into the high-growth fixed broadband market in Indonesia with the country’s largest broadband operator that is a profitable and cash-generating partner.
Creating a sustainable future of work
In line with our capital recycling strategy to unlock the latent value of our assets and invest the proceeds in growth areas where we can achieve higher returns, we partnered with global real estate group Lendlease to redevelop our Comcentre headquarters into a S$3 billion world-class sustainable workplace featuring the latest smart building and digital technologies come 2028. As anchor tenant, Singtel will occupy about 30% of total space in the new development, while sharing rental revenue with Lendlease. This move will further strengthen our financial position while creating an exciting next-generation workplace for our employees. Importantly, it will also contribute to the rejuvenation of the Orchard Road precinct with a net-zero energy development that is aligned with our carbon neutral commitments.
Supporting our communities
Doing right by our communities and our planet continues to guide us on our purpose-driven journey. We’ve strengthened our sustainability commitments by bringing forward our net-zero goal to 2045 from 2050. We’ve also updated our 2030 SBTi targets to ensure alignment with the 1.5°C climate goal as set out in the Paris Agreement. These targets are currently pending validation by SBTi and we will share them when approved. We continue taking care of our stakeholders by making community investments of S$32 million across Singapore and Australia. As always, staff development is high on our agenda, with S$22 million invested in reskilling and retraining our people in Singapore and Australia. Our work-study programmes across Singtel, Optus and NCS are helping our people deepen their expertise and capabilities to remain relevant in our fast-paced industry, even as they stay on the job. We will keep striving to make a positive impact on society by supporting our people and communities and preventing irreversible climate change.
We would like to extend our heartfelt thanks to the Board for their guidance and the management for helping to navigate the past year’s challenges. Given the 5G leadership that we’ve established, and our ongoing efforts to restructure and drive new growth, we have every confidence the Group is well-placed to do bigger and better in the year ahead.
