Lang joined Singtel in 2017 as CEO, International, from CapitaLand — where he was group CFO — and was appointed group CFO of Singtel in 2021.
For a company as large as Singtel, the CFO role is no longer about just reporting the numbers, he says. “The role of the CFO has changed quite significantly over the last 10–15 years. And in many ways, Singapore companies are starting to realise that the role of the CFO is no longer the traditional, typical role that focuses on costs, reporting the numbers,” Lang points out.
Since he was appointed CFO, the focus has been on value. “When I talk about value, it’s not just for shareholders, but it is for customers, it is for our own employees, it is for broader stakeholders. That’s where the CFO role has evolved; it is evolving into that type of role.”
Yes, numbers are important for a CFO. But Lang notes that it is hard for a CFO to be an effective numbers person without that CFO being a business person as well. It’s the business that drives the numbers, and it’s the numbers that guide how the business strategy should be implemented if the company needs to target a certain return on capital, he points out.
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If a corporation has a strategy of achieving a return on capital, it may require a shift in business, doubling down in certain areas. You need people — effective people, Lang emphasises. “And that’s where I think the CFO has to be a numbers person, a business person and a people person. It’s all interrelated.”
The CFO — other than the CEO — will have a good line of sight across the entire group of businesses, because the CFO needs to know the numbers across all the businesses. The CFO needs to keep an eye on the company’s capital position, its shareholders’ funds, cash flow and so on.
“It is a unique role in the sense that you can say, here’s how I can help to achieve this for you, Mr CEO. But at times, you need to be able to be bold enough to say no and explain why things cannot be done. It is the partnership role that you play with the CEO that is important,” he says.
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In 2021, when Lang became CFO, he launched Project Empat, a clear strategy to get Singtel’s share price to $4 at a time when its share price was at $2.40. “Even for myself, there was a lot of self-doubt whether that could actually be achieved,” Lang recalls. The target was achieved in May this year.
Previous wrong turns caused impairments
The Project Empat target required the group to write-down the investments from some of its wrong turns. Yuen Kuan Moon was appointed group CEO of Singtel in January 2021. In May 2021, when Singtel announced its FY2021 results for the year to March 31, the group took the opportunity to make impairments of $589 million (US$438 million) and $336 million (US$250 million) for the intangible assets and goodwill of Amobee and Global Cyber Security Business (which comprised Trustwave), respectively. Amobee was acquired in 2012, and Trustwave in 2015.
“We invested quite a bit into the US in digital businesses that we were not too familiar with,” Lang says. The 5G capex wave also took up a lot of capital. “In 2019 and 2020, we had to cut dividends, not once, but twice, which was very painful.”
Lang readily acknowledges that Singtel went through challenging times from 2017 to 2022. First, there was the threat from over-the-top or OTT players, which deliver content over the internet. In South and Southeast Asia, messaging apps are widely used as a form of communication. For instance, WhatsApp, which is owned by Meta Platforms, has supplanted SMS in these regions. Moreover, consumers can make free international calls on WhatsApp via the internet versus incurring hefty IDD charges. That has undermined the way telcos are selling mobile plans to consumers. In the corporate world, employees are now able to conduct online meetings over Zoom and Teams, instead of making expensive IDD calls.
At the same time, in 2021, SingTel — through its investment in Airtel — faced some regulatory fines in terms of adjusted gross revenue (AGR), a key metric used to calculate fees to the government in India.
Additionally, in India, the rise of Jio as far back as 2016 caused fierce price competition. Before Jio, India’s telecom market was dominated by players like Airtel, Vodafone, and Idea. Jio’s entry forced an intense price war, where 13 players eventually morphed into just three, including Airtel, in which Singtel has a 28.3% stake.
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Airtel’s mobile average revenue per user (ARPU) declined almost 50% after Jio entered the India market in 2016. In 2018, its ARPU fell to INR104, compared to INR193 before Jio’s entry. Its corresponding ebitda margin declined from 42.4% to 19.1%. In FY2025 (for the 12 months to March 31), Airtel’s ARPU has recovered to INR245, and its ebitda margin has rebounded to 57.8%.
In Australia, because of some regulatory changes, there was a shift of value away from the telco operators towards the National Broadband Network, a provider of the fibre broadband network. Subsequently, in FY2024, Singtel announced an impairment of $1.985 billion for Optus’ goodwill.
Competition at home came in the form of liberalisation, where new mobile operators introduced cut-price plans for consumers. Consolidation has come to Singapore’s telco scene this year, with TPG (which owns Simba) acquiring M1’s consumer business and StarHub completing the acquisition of the remaining 49.9% stake in MyRepublic’s Singapore broadband business.
Capital management, pools of capital, capital recycling
In May 2024, Singtel launched ST28, which coupled lifting “business performance” alongside “smart capital management”.
According to Lang, to sustain the capital needs of Singtel, the group needs to create new pools of capital. Singtel initially was just reliant on one pool of capital, operating cash flows.
There are a few ways to improve operating performance. “Number one, our core connectivity business needs to improve, and that’s where Optus comes in. Optus moves the needle today. Optus is at about 2.5% of ROIC [return on invested capital]. We have every intention to grow that to the high single digits,” Lang says.
For instance, in the last financial year, Optus had $400 million of ebit. In the good old days, Optus reported $1 billion of ebit.
“To some extent, we could borrow to grow our businesses. When operational cash flows came under stress, it was very difficult to sustain growth through capex as well as to maintain our dividend. We had to create alternatives in terms of capital sources,” Lang says.
The group created two additional pools of capital. The first new pool of capital is a portfolio of assets, including its network of listed mobile associates across the region. As some of these companies, such as Airtel, are listed, their market value is very apparent.
“If we do decide to dispose of or monetise a small portion, it can be done overnight. We have listed companies that we can monetise very quickly on an overnight basis,” Lang says. As an example, on May 16, Singtel announced it had sold 1.2% of Airtel for $2.0 billion as part of its active capital management. Singtel has also revealed its plans to equalise its stake in Airtel with Sunil Mittal, the founder.
Although Singtel has not announced a value on the portfolio of monetisable assets, its mid-term monetisation target is around $9 billion, an increase from $6 billion when ST28 was first announced last year.
The second new pool of capital is private capital, in the form of KKR and LendLease, where Singtel relies on private capital to fund new businesses. In 2023, Singtel partnered with KKR where KKR committed up to $1.1 billion for a 20% stake in Singtel’s regional data centre business named Nxera in January 2024. The partnership valued Singtel’s overall regional data centre business at $5.5 billion. KKR will have the option to increase its stake to 25% by 2027 at a pre-agreed valuation. In 2024, TM, formerly Telekom Malaysia, and Singtel announced a joint venture to develop a sustainable, hyper-connected AI-ready data centre campus in Johor.
Nxera has plans to expand its operational data centre capacity from the existing 62MW to over 200MW in the region, to support the adoption of AI. It is currently developing three next-generation AI-ready data centres in Singapore, Indonesia and Thailand. With support from private capital partners, Nxera targets to build and operate more than 200MW across the region in the next three years.
“The data centre business is a very capital-intensive industry. The cash flow profile is going to be negative for the first few years. Public capital cannot be used to fund this type of business. We needed to rely on private capital,” Lang says.
Meanwhile, NCS, having built up a regional presence via a series of acquisitions, will continue to capture more business as enterprise customers move to adopt more technological capabilities.
New dividend policy
For years, Singtel was known to be a generous dividend stock. Under the combined strain of funding new capex and coping with operating slowdown, it was forced to cut its payout. With ST28, announced at its FY2024 earnings, Singtel has become an attractive dividend play again, with a clearly defined set of parameters.
First, its core dividend payout ratio has been raised to between 70% and 90% of underlying net profit, which will track business performance. It has also announced more dividends based on excess capital generated by asset recycling.
In addition, Singtel announced a “value realisation dividend” of between 3 and 6 cents per year to be paid from the balance of its capital recycling after netting off capex — a level of payout Singtel says can be sustained easily for the next five years or so.
At its FY2025, Singtel also announced a $2 billion value realisation share buyback programme, where shares would be cancelled and help support EPS and DPS.
Lang is quick to credit his colleagues for coming on board for such big moves — if the business units could not improve their performances, he would presumably struggle to find the cash to pay shareholders.
“I would say we have learned our lessons. We have turned the business around. We have appointed new management. We have introduced new governance practices and new governance models,” Lang concludes.
Singtel last traded at $4.20 on Aug 19, confirming that Project Empat was clearly a success. Further up the capital management ladder, a possible IPO of either Nxera or NCS could materialise.
