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Digital pivot paying off for Singtel’s NCS business

Digital pivot paying off for Singtel’s NCS business

Overall, Singtel Group’s underlying net profit increased by 17 per cent during the six-month period.

Yuen Kuan Moon (Singtel)

Yuen Kuan Moon (Singtel)

Credit: Singtel

Digital, cloud, platforms and cyber revenue contributed close to half of the total operating revenue for Singtel’s IT services provider business, NCS, in the Singapore-based telco group’s first half financials.

The increase in NCS’ revenue share from its digital, cloud, platforms and cyber offerings is significant, according to Singtel, with the group's CEO Yuen Kuan Moon noting that it comes amid a 'reset’ for the company.

“This first half performance underscores our ongoing strategic reset to develop new growth engines in ICT and digital services,” Yuen told Singtel Group shareholders in a statement.

“The pandemic has provided tailwinds of digitalisation that we are leveraging to rebuild our business during this crisis and we continue executing to this strategy by enhancing NCS’ digital capabilities in cloud and data and growing our digital infrastructure to innovate our way through this disruption,” he added.

Indeed, earlier this year NCS unveiled a bold new go-to-market strategy amid plans to transition from a traditional service provider to a digital leader, underpinned by regional expansion, 2000 new hires and an enhanced brand identity.

The move was heralded as a “pivotal moment” in the history of NCS, one which spans four decades and sees the business realise potential as a “new growth engine” for the wider Singtel Group.

And it appears the strategic shift is beginning to pay off.  

In the six months to 30 September 2021, NCS changed its revenue mix significantly, according to the latest financials.

NCS’ digital, cloud, platforms and cyber revenue contributed 48 per cent of the provider’s total operating revenue, up from 37 per cent in the same period last year, as more enterprises accelerated their digital transformation.

Overall, NCS put in a positive performance, with an increase of 9 per cent in operating revenue.  

Meanwhile, bookings of S$1.1 billion were recorded in the first half of the year, thanks in part to new wins and contract renewals from the public and enterprise sectors.

Excluding Jobs Support Scheme credits and other related government reliefs, the segment’s earnings before interest, tax, depreciation and amortisation (EBITDA) was up by 5 per cent, to S$147.4 million.  

As well as reorienting its revenue mix, NCS has been expanding its presence throughout the region. In October, for example, the company acquired Australian Microsoft partner Eighty20, further expanding its already notable presence in the country.  

Australia also played host to positive results from Optus, Singtel’s telco subsidiary in that country, with the unit reporting a positive set of results. Optus' EBITDA was up by 5 per cent, driven by continued momentum in the mobile business.

However, Singtel’s consumer unit in Singapore didn’t fare as well as its Australian counterpart, with operating revenue declining by 1 per cent, mainly due to a contraction in mobile equipment sales as a result of supply disruptions caused by global chipset shortages.

Overall, Singtel Group’s underlying net profit increased by 17 per cent during the six-month period, to S$983 million, driven mainly by Airtel’s robust turnaround, the company claimed.

With lower exceptional losses, net profit more than doubled from the same period last year to S$954 million, while operating revenue grew by 3 per cent to S$7.65 billion, lifted by Optus’ mobile service revenue in Australia, the surge in digital services revenue for NCS and data centre revenue.

“We are making headway in our other strategic priorities, including the rollout of commercial 5G services and unlocking the value of our infrastructure assets with the partial divestment of Australia Tower Network, which operates Optus’ passive telecommunications tower infrastructure,” Yuen said.  

“While COVID-19 uncertainties linger, we remain focused on extending our leadership in 5G to drive growth across our core and new business by taking advantage of emerging technologies and continued disruption.  

“These initiatives put us in a unique position to capture growth opportunities as economies open further and travel gradually resumes,” he added.

The group's latest half yearly results come just weeks after it detailed how its partnerships with Amazon Web Services (AWS) and Microsoft Azure were underpinning its joint public sector 5G use case trial project with the Singapore government in Sentosa, an island resort off Singapore’s southern coast.

The so-called ‘5G@Sentosa’ program is a public-private sector collaboration led by Singapore’s Government Technology Agency (GovTech), the Sentosa Development Corporation (SDC) and Singtel.

As a core partner in the joint project, Singtel is playing a major role with its purpose-built network and edge cloud infrastructure in Sentosa, supporting 5G application rollout on a mass scale.

Specifically, Singtel’s 5G network and multi-access edge compute (MEC) infrastructure is powering some of the trials, supporting the deployment of low latency business critical applications.


Tags optussingtelNCSYuen Kuan MoonSigapore

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