Singtel's first-half underlying profit rises 14%
Singtel's first-half profit increase was driven by a strong performance from Australian subsidiary Optus and its regional associates.
A man looks out of the window under a Singtel signage at their head office in Singapore on Feb 12, 2015. (File photo: Reuters/Edgar Su)
Singapore Telecommunications posted a 14 per cent rise in first-half profit on Wednesday (Nov 12), boosted by robust performance from its Australian unit Optus and regional associates.
Southeast Asia's largest telecom firm said underlying net profit was S$1.35 billion (US$1.04 billion) for the six months, ending on Sep 30, compared with S$1.19 billion last year.
That was slightly below Visible Alpha consensus estimate of S$1.37 billion.
Singtel said the increase was driven mainly by regional associates Airtel and AIS, and operating companies NCS and Optus.
The post-tax contribution from regional associates, including India's Bharti Airtel, Indonesia's Telkomsel and Thailand's AIS, rose 12 per cent to S$0.92 billion.
Bharti Airtel reported a 89 per cent jump in quarterly profit, as users upgraded to higher-margin 4G and 5G plans and on steady subscriber additions.
Meanwhile, Optus' operating revenue rose 2 per cent helped by growth in its mobile postpaid plans and higher revenue from a regional network-sharing deal.
Singtel Group CEO Yuen Kuan Moon said its first-half results "reflect the positive momentum across our diversified portfolio of businesses across the region".
"While the macroeconomic outlook remains challenging, and the Optus business faces uncertainty, our business and geographical diversity is lending stability to the group’s performance," he said in a press release on Wednesday.
Singtel's net profit rose to S$3.40 billion, boosted by a net exceptional gain of S$2.05 billion, mainly from the sale of a partial stake in Airtel in May and an Intouch-Gulf merger.
Its operating revenue was down 1.2 per cent to S$6.91 billion, due to the strong Singapore dollar, said the firm.
In constant currency terms, the group’s operating revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) and operating company earnings before interest and taxes (EBIT) would have risen 1.9 per cent, 4.9 per cent and 14 per cent respectively, it added.
OPTUS
Optus’ operating revenue increased by 2 per cent, largely due to mobile postpaid growth and higher revenue from a regional network sharing agreement that began in January, said Singtel.
Its home revenues also rose 2 per cent on the back of higher national broadband network and fixed wireless revenues.
Wholesale and Enterprise and Business Fixed revenue declined 2 per cent. EBIT rose 27 per cent, mainly due to mobile growth.
Optus, the second-largest telco in Australia, came under fire in September after an outage impacted 600 people across the country for more than 10 hours.
Some customers were unable to reach emergency services, with the outage linked to four deaths. Optus suffered another outage just over a week after that.
Singtel said on Wednesday that investigations into the outage that impacted emergency services were ongoing.
“Since the recent Triple Zero outage, we have been working with the Optus board and management to step up efforts to improve Optus’ operational capabilities as a critical services provider that will do right by its customers and all Australians,” said Mr Yuen.
REGIONAL ASSOCIATES
Singtel credited its first-half performance to the contributions from some of its regional associates.
It noted that Airtel Group saw robust earnings growth in both India and Africa from solid execution and higher mobile tariffs.
Thailand’s AIS posted a stronger profit due to revenue growth and effective cost management, added the telco.
However, the performances of its associated companies in the Philippines and Indonesia were affected by various factors.
“Telkomsel’s performance was affected by weaker mobile performance, a capital gain from the sale and leaseback of indoor infrastructure in the last corresponding period, and higher interest expenses,” said Singtel.
Philippine telco Globe’s earnings fell due to weak consumer spending, it added.
SINGTEL SINGAPORE
Singtel Singapore’s operating revenue was stable despite a highly competitive market, said the company.
“Strong SME and enterprise connectivity growth offset a weaker consumer business,” it added.
“Mobile service revenue fell 10 per cent due to intense competition and reduced roaming, but was partially mitigated by growth in Internet of Things connectivity.”
Singtel Singapore's EBIT remained stable, given a lower depreciation and amortisation charge due to a smaller asset base.
