+ Bharti was the bright light. In 4Q20, Bharti reported an operating profit of S$86mn (4Q19: -S$12mn). The associates contribution from Bharti is still negative due to heavy finance cost (S$173mn) and FV loss (S$27mn).
+ ICT revenue grew 7% in Singapore. NCS revenue grew due to higher data centres contracts and maintenance projects. NCS order-book was up approx. 7% YoY to S$3.2bn in Mar20 (Mar19: S$3bn).
– Singapore mobile ARPU suffers. Mobile blended ARPU suffered a large drop of 19% YoY (13% QoQ) to record low S$26. A combination of lower roaming and higher SIM plans contributed to the weakness. EBIT managed to grow due to undisclosed wage credit in March (est. S$20mn).
– NBN pain for Optus. Optus net profit plunged 83% YoY in A$39mn. EBIT margins tumbled from 16% to 5%. The switch from their internal fixed broadband network to wholesale NBN network has hurt margins significantly for both consumer and enterprise access business. There is still another 135k Optus customers to be migrated to NBN.
The pandemic will place pressure on all segments of Singtel operations:
Maintain NEUTRAL with a lower TP of S$2.44 (prev. S$3.18).
We cut our FY21e earnings by 16%. Our valuation model incorporates a 20% discount to the market valuation of the associates.