Singtel profit edges up 0.3%
TODAY file photo
SINGAPORE — Singtel reported on Thursday (Aug 11) that net profit for its fiscal first quarter rose a marginal 0.3 per cent to S$944.3 million from the same period last year, when it had divestment gains from certain venture investments and Airtel Africa’s tower assets.
Its earnings — although boosted by robust mobile data usage and increased contributions from regional associates — were also affected by a strong local dollar, and net profit would have increased 2 per cent if the exchange rate was constant, said Singtel.
Operating revenue for the quarter ended June declined 7 per cent to S$3.9 billion, or 6 per cent in constant currency terms, due to mandated cuts to mobile termination rates in Australia.
Excluding the impact of the rate reduction, operating revenue dipped 1 per cent in constant currency terms.
Pre-tax contributions from the regional associates rose 14 per cent to S$714 million in the quarter, due to strong performances by Telkomsel in Indonesia and Airtel in India.
Singtel also holds stakes in AIS in Thailand and Globe in the Philippines, and a wholly owned subsidiary in Australia called Optus.
“The recurring theme across all our markets is mobile data. Having invested extensively in 3G and 4G networks and services and with the rise of smartphone adoption, our associates were well-positioned to successfully drive data usage and customer growth. Across Singapore and Australia, our quality networks, differentiated content and flexible data pricing plans also helped us stand out from competitors,” said Ms Chua Sock Koong, CEO of Singtel Group.
Mobile data services continued to drive growth across its consumer business in Singapore and Australia, said Singtel, mitigating the declining trends in voice and roaming.
While overall group revenue fell on service credits from device repayment plans in Australia and lower equipment sales across both markets, earnings before interest, tax, depreciation and amortisation (Ebitda) held stable, with reduced traffic expenses, lower mobile acquisitions and retention costs, said the company.
In Singapore, strong demand for mobile data services offset declines in voice, text and roaming as postpaid customers migrated to higher-tier plans. Revenue from the home market was boosted by popular content offerings, such as the Uefa Euro 2016 and Copa America 2016 football, as well as increased take-up of higher speed fibre broadband plans.
Infocomm technology was also a key performer, as demand for cyber-security services grew, with cyber-security revenues of S$109 million for the quarter. “Our ICT business is getting a solid boost from new opportunities in cyber-security, which has emerged as a critical issue for both governments and businesses. Our capabilities and expertise in this global field, together with our trusted partners’ capabilities, are winning new business,” added Ms Chua.
Singtel reiterated its outlook for the current year, expecting a low single-digit increase in revenue and Ebitda with free cash flow of about S$1.5 billion. Capital expenditure will increase to about S$2.8 billion, with S$1 billion in Singapore and A$1.8 billion (S$1.87 billion) in Australia. Dividends from associates are expected to slightly increase to S$1.1 billion.
In response to queries about the impact of Infocomm Development Authority of Singapore’s plans to auction additional mobile spectrum for a fourth operator this year, Singtel said that it is ready for the competition within Singapore and the region.
Currently, Singtel commands a 49.8 per cent share of the mobile market in Singapore, with StarHub holding 26.7 per cent and M1 23.5 per cent.
Singtel’s share price closed 1.67 per cent up at S$4.27 apiece on Thursday.
