Singtel’s profit dropped sharply in fiscal Q3 2019 (calendar Q4) as weak economic conditions and falling mobile prices led to revenue declines across all its business units.
Net profit dropped 23.8 per cent year-on-year to SGD627 million ($451 million), due mainly to lower enterprise contributions and exceptional gains.
Operating revenue fell 5.4 per cent SGD4.38 billion, attributed to price erosion in mobile services, lower equipment sales, continued weak business sentiment and spending, and heightened market competition.
Regional associates’ pre-tax profit rose 15 per cent to SGD393 million, driven by strong data growth across all markets.
Bharti Airtel’s losses narrowed on the back of strong 4G customer growth, subscriber upgrades and price increases. Singtel also benefitted from a stronger performance from Globe Telecom in the Philippines, but a lower contribution from Telkomsel in Indonesia.
Chua Sock Koong, Singtel CEO, said: “It’s been a challenging quarter. Weak macroeconomic conditions have weighed on our enterprise business, and Optus saw eroding margins in its fixed retail business with the higher mix of NBN customers. However, we continue to execute to our longer-term growth strategy.”
Overall mobile turnover dipped 7.4 per cent, as a result of a 9.3 per cent drop in equipment sales to SGD168 million and a 6.6 per cent fall in service revenue to SGD243 million. The service revenue decline was due to lower voice usage and data price pressures, Singtel said.
Its prepaid subscriber base fell 3 per cent to 1.59 million, while post-paid rose 5.2 per cent to 2.67 million. Blended ARPU was down 9.5 per cent to SGD30.
Optus’ mobile service revenue declined 3.1 per cent to AUD869 million ($584.4 million) and equipment sales dropped 16.7 per cent to AUD528 million.
An increase in the mix of SIM-only plans and intense data price competition continued to impact ARPU, Optus said. Prepaid and post-paid ARPU fell 2.2 per cent to AUD18 and 9.5 per cent to AUD38 respectively.
The operator said due to the unbundling of handsets from mobile service plans, it expects lower equipment sales and more sales of lower-margin devices to continue into the fourth quarter.
Prepaid subs remained steady at 3.5 million, while post-paid subs grew 4.7 per cent to 5.8 million.
Chua said Optus rolled out more than 400 5G fixed wireless sites, while Singtel will submit its 5G proposal to the government later this month.
Enterprise revenue fell 4 per cent to SGD1.54 billion while Digital Life revenue fell 15 per cent to SGD321 million due to spending cuts by Amobee’s major clients and declines in the digital marketing arm’s managed media and social businesses.
For the full fiscal year ending 31 March, it forecast group turnover, excluding NBN migration revenues in Australia, to decline by a mid-single-digit figure, while capex will hit SGD2.1 billion, comprising AUD1.3 billion for Optus and SGD800 million for the rest of the group.Subscribe to our daily newsletter Back