Singtel reported a double-digit drop in profit and anaemic revenue growth for its fiscal Q3.
The operator group’s financials were adversely impacted by its Optus unit in Australia, which suffered due to lower NBN migration and voice revenue, along with a weaker Australian dollar. Group earnings were also hit by a decline in profit contributions from regional units, mainly Bharti Airtel in India.
Net profit for the quarter ending 31 December fell 14.2 per cent year-on-year to SGD823 million ($607 million), with group revenue inching up 0.9 per cent to SGD4.63 billion.
Pre-tax profit contributions from its associates fell 33 per cent, with Airtel posting a pre-tax loss of SGD120 million compared with a profit of SGD46 million the previous year.
Group mobile service revenue dropped 7.7 per cent to SGD1.33 billion: equipment sales increased 13.4 per cent to SGD932 million.
Chua Sock Koong, Singtel Group CEO, said: “We have stayed the course despite heightened competition and challenging market and economic conditions. We’ve continued to add post paid mobile customers across our core business in both Singapore and Australia, while making positive strides in the ICT and digital space.”
The company said overall performance was affected by the global economic slowdown and weaker sentiment: “The intense competition in India also negatively impacted Airtel’s earnings, although there are early signs of market stabilisation.”
In Indonesia, with the completion of a SIM card registration exercise, Telkomsel’s performance returned to growth on a sequential basis. In Thailand, AIS’ revenue improved year-on-year, but profit fell on higher marketing costs and network investments, while in the Philippines, Globe Telecom’s earnings rose due to strong data revenue growth in mobile and broadband.
Chua added: “Our long-term view on our regional associates remains positive as they continue to ride the growth in data and execute well against the challenges and competition. We expect the regional markets to revert to more sustainable market structures and deliver long-term profitable growth.”
Home and away
In Singapore, operating conditions continued to be extremely competitive with mobile revenue impacted by higher handset subsidies and an increased mix of premium handset sales, the company said.
Operating revenue dropped 5.7 per cent year-on-year to SGD598 million, mobile service turnover fell 4.2 per cent to SGD261 million and consumer equipment sales declined 7.4 per cent to SGD188 million.
Its mobile customer base grew by about 70,000 year-on-year to end December with 4.2 million subs. Post paid and prepaid ARPU fell 11 per cent and 3 per cent to SGD43 and SGD18 respectively.
Optus in Australia experienced a 3.5 per cent decline in mobile service revenue to AUD897 million, due to lower ARPU partly mitigated by post paid customer growth. Prepaid ARPU dropped 9.6 per cent to AUD18, and post paid fell 6.8 per cent to AUD41.
Equipment sales jumped 31.1 per cent to AUD634 million.
Its mobile subscriber base rose 3 per cent to 10.2 million, but prepaid subs fell by 140,000 to 3.53 million. LTE penetration rose to 64 per cent.
Singtel’s Digital Life unit recorded a 16.7 per cent increase in revenue to SGD379 million, boosted by Amobee’s programmatic ad business and contributions from Videology, which was acquired in August 2018.
For the full fiscal year, Singtel forecasts stable group mobile service revenue in Australia, a low single-digit increase in group ICT revenue and a low single-digit decline in EBITDA for the group’s core business.Subscribe to our daily newsletter