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SingTel Q1 earnings drop 17 per cent

Looking ahead, SingTel expects group revenue to be stable for the current fiscal year, and earnings before interest, taxes, depreciation and amortisation to increase by low single digits. 

SINGAPORE: SingTel has rung in a 17 per cent drop in first quarter earnings, with net profit for the three months ended in June coming in at S$835 million dollars. The drop was due to a lack of one-time gains as well as weaker currencies in its regional markets, and the results were largely in line with analysts' expectations. Looking ahead, SingTel says it remains focused on building its data and digital services.

SingTel's mobile associates in India and the Philippines reported strong performance for its fiscal first quarter. Overall pre-tax earnings in its regional markets grew by 8 percent to S$594 million dollars, supported by a strong growth momentum in data usage. As at June 30, its combined mobile customer base across all its markets grew 10 per cent to 525 million from a year ago.

SingTel recently acquired two US-based technology firms, Adconion and Kontera - through its mobile advertising subsidiary, Amobee - and says this will enhance digital content in its various markets.

"Adconion would bring a lot of contacts into major advertisers which we certainly hope to be able to up-sell. We also bought Kontera, which has unique targetting technologies, which would help us enhance our entire digital marketing business," said Ms Chua Sock Koong, Group CEO of SingTel.

"In the emerging markets where our associates operate, 3G networks are now being rolled out. Many of the services we're working on in Digital L!fe will allow our associates to leapfrog and go into service provision very quickly."

During the quarter, Amobee added new clients such as Warner Bros and Samsung to its portfolio. Its new mobile money service, Dash, has attracted more than 10,000 users who have made 30,000 transactions since its launch in June 2014. However, SingTel's Digital L!fe business has yet to turn in a profit, and one industry watcher says, it will be a while before SingTel starts to monetise its investments.

Mr Sachin Gupta, Regional Head of Telecoms Research, APAC, Nomura, said: "If you look at the core businesses at the moment, underlying growth has been a challenge, and doesn't look like there's much on the horizon for that to reverse. Telco companies like SingTel, and others in Asia as well, are looking for growth avenues.

"With new growth it does come with different challenges as well, but it's not like they're sacrificing their capital investment or dividends just to pursue this growth. I don't think it's a bad strategy, but how the returns will be realised is still a bit of an unknown."

Looking ahead, SingTel expects group revenue to be stable for the current fiscal year, and earnings before interest, taxes, depreciation and amortisation to increase by low single digits.