TUALF (TUALF) Q4 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Tuas Limited Full Year Financial Year 2026 Results Call. [Operator Instructions] And finally, I would like to advise all participants this call is being recorded. I'd now like to welcome Richard Tan, CEO, to begin the conference. Richard, over to you.

Good morning, and thank you for joining us. I'm Richard Tan, CEO of SIMBA Telecom, the principal operating entity of the Tuas Group. Also on the call today are Mr. David Teoh, Executive Chairman of Tuas Limited; Tony Moffatt, Tuas Limited Company Secretary; and Mr. Harry Wong, CFO of SIMBA Telecom. It is a pleasure to present the financial results for Tuas Limited for the fiscal year ended 31st July 2026, covering the period which started 1st August 2025. Let me briefly outline today's agenda as shown on Slide 2. We'll begin with Harry, who will walk through the financial performance and key metrics for the year. I'll then provide an update on our operational progress, strategic initiatives and outlook for FY '27. We'll conclude with a Q&A session to address any questions you may have. Please note that all financial figures discussed today are denominated in Singapore dollars. With that, I will now hand over to Harry to take us through the numbers.

Good morning, everyone. My name is Harry Wong, CFO of SIMBA Telecom. I will be presenting the financials of the Tuas Group. On Slide 3, you'll see that we achieved a notable improvement in the financial results during FY '26 when compared to FY '25. Revenue for the year is $187.6 million, up from $151.3 million last year. Underlying EBITDA increased 22%, up from $68.4 million in the prior year to $83.7 million. We achieved an underlying full year net profit after tax of $29.6 million, which was a significant improvement on the prior year's profit of $6.9 million. On Slide 4, we show the growth in revenue and EBITDA for each of the last 4 halves. Revenue increased 24% in FY '26. EBITDA margin has been stable year-on-year at 45% of revenue. Gross ARPU for the year was 9.42. The key drivers of the year -- on the year-on-year EBITDA uplift continued to be increased subscribers and expanded plan mix catering to different customers' needs. We are satisfied with the way our products are being embraced by customers in a very competitive market. Slide 5 shows our sustained mobile subscriber growth over the last 2 years. As of 31st July 2026, we have about 1.4 million subscribers, representing a 16% increase over the past year. We estimate SIMBA's mobile subscriber market share to be around 15%. Slide 6 shows the broadband subscriber base. As of 31st July 2026, we have approximately 62,000 active services, adding 36,000 subscribers over the year. Despite this growth, we still hold a relatively small share of the home broadband market. So increased market share in the fixed broadband continues to be a potential growth of -- for SIMBA. We proceed on cash flow on Slide 7. Apologies on the title for the date reference, it should be referring to the year ending 31st July 2026. We continue to show positive cash flow. Opening cash and term deposit balance was $80.7 million. Net cash generated from operating activities was $91.3 million. The main cash outflow comes from acquisition of plant and equipment and intangible assets of $39.3 million, largely mobile network and some fixed broadband infrastructure. We raised funds from the capital market of $316 million to support the M1 acquisition. This brings the end cash and term deposits to $488.8 million as of 31st July 2026. Slide 8 shows the movement in cash from operations and cash CapEx over the past 5 financial years. We are quite proud of our track record showing efficient deployment of capital generating strong cash returns for the company. With this, I would let Richard proceed with the business updates.

Thank you, Harry. The Singapore mobile market remains highly dynamic, and we are continuing our capital expenditure investments focused on network densification for better performance and capacity and to expand our 5G footprint. On the technology front, our mobile core upgrades are fully complete for network planning for our 5G stand-alone transition remains ongoing. We are also actively transitioning to a new cloud-based business support system of BSS to enhance customer experience and improve cost efficiency. The network infrastructure investments are directly reflected in network performance. Looking at the Opensignal mobile network Experience Reliability metrics covering the period April to June 2026, SIMBA achieved an outstanding reliability score of 909 points out of 1,000, placing us second in the market. Opensignal is a third-party investigating agency who reports on network performance. Moving to fiber broadband. We continue to roll out enhancements to deliver 10 gigabits per second connectivity across homes and businesses. Our product offerings now include exclusive WiFi 7 premium router packages that deliver the best value in the industry as well as a market-leading 10 gigabit per second business package priced at SGD 139 per month with GST. The value proposition for SIMBA fixed broadband products is backed by top-tier performance. According to Speedtest Intelligence, which is another third-party reporter, data collected from January to June 2026 shows SIMBA Telecom leading all providers in Singapore for network consistency with a market topping consistency score of 96.2%, outpacing our major competitors. From this and the previous slide, it is clear that SIMBA engineers its networks for both reliability and consistent connectivity, and this is appreciated by our customers. Next, I would like to address the status of the proposed M1 acquisition. As you will know, the acquisition could not complete without IMDA regulatory. Following the announcement of the proposed transaction, IMDA notified SIMBA of its designation as a critical information infrastructure operator on 24th September 2025. The consolidation application was formally accepted by IMDA 5 days later. On 9th February 2026, the Ministry of Digital Development and Information publicly disclosed for the first time that all 4 Singapore telcos were targeted by advanced persistent threat groups. Confirmation was provided that no sensitive data was exfiltrated and core systems remain uncompromised. After that, the implications of the merger on national cybersecurity issues generally became an item under consideration by the IMDA in the consolidation application. On 17 May 2026, IMDA announced that it had suspended its review of the proposed consolidation pending an investigation. Because the sales and purchase agreement reached its contractual long stop date of 21 May 2026 without regulatory clearance, the transaction lapsed and did not proceed. Regarding regulatory compliance, SIMBA has been fully cooperating with the IMDA investigation. Adherence to regulatory standards remain a top priority across all our operations, and Tuas will await formal announcement from the IMDA before providing further public comments. Looking ahead, our strategic priorities focus on broad-based revenue growth by leveraging our value proposition and network infrastructure, which is well established. We will maintain our focus on product innovation and services enhancement. More importantly, we will not lose sight of the value we have brought to the market by driving competition of providing reliable and dependable services. We expect combined mobile and broadband CapEx for FY '27 to sit between $50 million and $55 million. This CapEx will be required for a range of initiatives, not the least of which is the stand-alone 5G network and other network upgrades. In addition to that business as usual CapEx, incremental CapEx and OpEx earmarked for cybersecurity compliance are projected to total somewhere between $15 million to $30 million in FY '27. I will now hand back to the moderator for the Q&A session.

[Operator Instructions] And your first question comes from the line of Siraj Ahmed of Citigroup.

Richard, I just have 3 questions. Just on the first one, I know you can't mention too much on the spectrum use. But just can you elaborate on whether it was a software or a hardware issue and just confirming that it has been fixed now?

Tony, you might want to start on that.

It's Tony Moffatt. The situation, as Richard has mentioned, was that there was some use of spectrum that was permitted by the IMDA and we then use it outside those limitations that were in that purpose. In terms of its -- whether it was a software or a hardware type of issue, it's -- that's just a function of the way in which the system works. It's kind of a combination of both of those things. And that's really all we can say about that at this stage.

Sure. And any -- Tony, anything on the time line when we can expect some news from IMDA?

We don't have any information from the IMDA about when they're going to make the decision.

Okay. Second one, Richard, just on the subscriber growth, it does look like there's a bit of a slowdown in that fourth quarter, right? Would love some color on this, was it you purposely slowing growth or not taking because of the IMDA review? Or is it more about competition? Was it churn? Some color would be really helpful.

Well, the mobile market is highly competitive with many of our competitors mimicking our plans. And then there was also increased termination of SIMs arising from SIMs that were used for scam activities. Now this obviously applies to all the telcos as well. So that's basically what was happening in the fourth quarter.

Okay. So that termination of SIMs that will be a one-off, isn't it? Should it be continuing into next year?

Well, as far as we know, scammers will always find ways to acquire the SIMs, and this is ongoing activity by the Singapore police force as far as we are aware. We continue to receive requests to terminate SIMs that are used for scam activities.

Okay. Got it. Last one, Richard, you are close to $500 million of cash on the balance sheet, right? I guess just the question is, do you think SIMBA and Tuas will still be allowed to take part in consolidation in the Singaporean market? Or is there something stopping you from that perspective?

Tony, you may want to comment to that?

There's -- we can't really say what's likely to happen as far as consolidation in the market is concerned. We -- I don't think we'll be blocked out from participating in consolidation should an opportunity arise. But there's nothing that's happening at this stage that would lead us to a view that was likely to happen in the near term.

Okay. Maybe another way to ask it. So then, Richard, you sort of mentioned 5G densification is a bit of concern given -- I mean M1 would have helped you with the 5G stand-alone sort of spectrum, right? You have a little bit of spectrum. Do you think -- and it's impressive your mobile score as well, right, from the Opensignal, do you think the densification just adding your cells -- in new sites and cells enough? Or you actually have to get some more spectrum?

So densification, obviously, there's always a balance between densification and spectrum. And the path forward is obviously network densification. But what is also clear is that we are allowed to run 5G on both the 2100 and the 900 megahertz band. So our planning takes into consideration on this to provide the best network experience. And as we stand right now, we are quite comfortable based on the plans that we have established.

[Operator Instructions] Your next question comes from the line of James Bales of Morgan Stanley.

Maybe firstly, just following up on Siraj's question on mobile subs. You talked about the benefit the brand got when the M1 transaction was announced. Has that unwound? Or how should we think about the potential brand damage from the controversy?

The brand continues to be very, very strong, and we continue to also invest in the brand. We have very loyal customers because I've been going around talking to dealers and customers, and they are obviously -- they obviously love what we're doing and the services that we provide for them. So we're very confident in terms of moving forward.

And then maybe just on the cybersecurity spend. Can you help us understand what are you spending the $15 million to $30 million on, what are the required outcomes from that and maybe just help us understand the mix of direct versus other OpEx versus CapEx in terms of composition of that?

Okay. Obviously, I would like to provide as much color as I can, but it's just that the cybersecurity framework is also an evolving framework and the threats are also by definition evolving, and there is AI happening in the background, which makes obviously the threats more sophisticated. So based on the overall evolving landscape, we definitely need to do what is necessary to meet the evolving threats. So therefore, we are trying to do it in the most efficient way because this is, frankly, the SIMBA DNA to do it the most efficient way to ensure not only compliance, but to address the threats head on. We're not giving a split right now in terms of CapEx and OpEx because as I've said, we may look at potentially moving to a more CapEx-light model so that it is also more cost efficient.

I guess what I'm asking, too, is like what is -- what would the regulator think, okay, that program has been a real success. You've ticked all the boxes. So what are the key outcomes that you're on the hook to deliver there?

As I said, there is a framework and the framework is being established, and that framework will also evolve, and there will be requirements that we will need to step up to. So the incremental CapEx expenditure and OpEx expenditure will address those stepping up of requirements. And as I've repeated myself, it is evolving because this landscape is moving very, very quickly. Nevertheless, we believe that this range is a very, very comfortable range, and this is why we are signaling this range to the market.

Okay. Got it. And then maybe on your outlook comments, what are you referencing with the comment more broad-based revenue growth in the outlook statement. Should we be thinking about more products? Or what exactly was the messaging there?

Well, I think the messaging is quite straightforward in the sense that both consumer, enterprise and SME markets, they are all very, very big. We believe we have done quite well in the consumer mobile market, but there's obviously much work to do in the business and enterprise space. I think Harry also highlighted the fact that our market share in fiber broadband and consumer are still kind of small. So we have more work to do to grow that. And nonetheless, we are also very excited by the opportunities presented to us in the enterprise broadband space. So therefore, by definition, we can be very hopeful that we'll be able to achieve broad-based revenue growth across the various segments, which I have just mentioned.

Okay. Got it. And we saw the business mix shift gross margin down in FY '26 with more broadband. If that strategy plays out and you're selling more of those services into SME and enterprise customers, should we expect that trend to continue?

Not necessarily because we are able to leverage the existing infrastructure that we have built for the business market as well. So it's early days right now. We're not giving any guidance in terms of how EBITDA will be moving forward. But what I can say is that we are building on what we already have. Therefore, we are in a very comfortable position in terms of managing costs.

And you have a follow-up question from Siraj Ahmed of Citigroup.

Just on -- following up with James' question about that investment in cybersecurity next year, Richard, is this like a onetime step up? I mean, and it can come off in FY '28 because you're taking consultants or something like that? Or is it just a onetime step-up and then it grows from there?

Based on what I can say is that we will need to continue to spend on cybersecurity because we will not obviously want to take the pedal off the foot in terms of maintaining the cybersecurity posture of our network. So it is very, very important. And we are also looking forward to the new frameworks and things, initiatives that are being set by the regulator as well as the Cyber Security Agency in Singapore. So we expect the spend to continue what it is, what it will be in future years, hard to say. That is why the range that we provided is for FY '27 and when we are ready, obviously, we'll provide guidance for FY '28.

Perfect. And then on that then, and on this broad-based revenue growth into next year, do you think -- I mean you've been a price leader in the market, right? Do you think this sort of -- given the investment in cybersecurity and stuff, it's time to increase ARPU or is it still the view that you'll be the price leader?

Well, price leadership is important, but I think we also need to consider the basic philosophy that we need to deliver value, great reliability as well, especially for the business market. And based on what we have built from our network infrastructure as well as the cost efficiency from our business operations point of view, we believe that we are in a good position to deliver both price leadership as well as an incredible amount of value packed at those price points, which we are pitching our products at.

Got it. Okay. And just on -- and I mean, to the extent that you can mention, you're flagging innovative new products into '27, is that for the business and SMEs -- the enterprise and SME market? Or is there something else for the consumer side as well?

Well, this is potentially competitive sensitive information. But obviously, whatever -- wherever there is market growth as well as market opportunity, we will definitely want to enter those markets and embrace those opportunities.

Okay. Got it. Last one, just on the cash balance again. I mean Tony sort of mentioned you'll still -- nothing is blocking you. Just how should we think about -- I mean you sort of raised the cash for the M1 acquisition. It looks like it's excess capital that's there. What should we be expecting from a capital management perspective?

It's a matter for the Board to decide, but obviously, any good opportunities that come our way, we will raise it to the attention of the Board.

And this concludes our Q&A session for today. I'll turn the call back over to Richard for final closing remarks.

Thank you all for your time and for engaging with our business update. The Board and management of Tuas Limited deeply appreciates your continued support. We look forward to delivering further value and growth in the months ahead. Thank you.

This concludes today's conference call. Thank you all for joining us. You may now disconnect.