• 1Q21 revenue and EBITDA were below expectations. Group revenue and EBITDA is down 14% and 24% YoY respectively.
• Australia consumer experienced the sharpest contraction, EBITDA down almost 34% YoY. Loss in on-net broadband customers by 65% to NBN hurts margins.
• Singapore mobile service revenue down 27%, in line with blended ASPs collapsing 27%,
• FY20 final dividend was cut by 49% to 5.45 cents. No earnings guidance provided for FY21.
• Maintain NEUTRAL with unchanged TP of S$2.44. We are keeping our FY21e PATMI estimates unchanged. We do not see a turnaround in the results until international travel resumes materially for roaming revenue to recover. Australia needs to complete its NBN transition and remove the significant cost of running its existing broadband network to expect any recovery.

The Positive

+ Optus mobile was relatively resilient. Australia mobile service revenue was relatively resilient, declining only 5.5% YoY at A$860mn. There was growth in the combined postpaid and SIM only plans subscriber base by 2.3% YoY.

The Negatives

– Singapore mobile ARPU still slipping.  ARPU still weighed down by the absence of roaming revenue. Mobile blended ARPU is down to another record low of S$23 (-27.7% YoY) in 1Q21.

– NBN pain for Optus. Without NBN, Australia consumer EBIT fell an incredulous 82% YoY to A$41mn. Weakness was across all segments with broadband bearing the brunt, in our opinion. On-net broadband subscribers are down 65% YoY whilst burdened by high operating cost.

Outlook

The two main pressure point for SingTel is Singapore mobile and Australia broadband. We expect at least another two quarters of weak YoY operating performance.

Maintain NEUTRAL with unchanged TP of S$2.44