Singtel, Singapore’s largest mobile operator, posted a small increase in profit for its fiscal Q3, but a double-digit slowdown in mobile sales led to a year-on-year revenue decline in its core business.
The operator’s net profit for the quarter ending 31 December rose 2 per cent year-on-year to SGD973 million ($690 million), on operating revenue of SGD4.41 billion, which was down 1.5 per cent due in part to the impact of mandated cuts to mobile termination rates in Australia. EBITDA was stable at SGD1.22 billion.
Singtel CEO Chua Sock Koong said the company managed to hold its ground against the backdrop of a slowing Singapore economy and more challenging business environment all around: “Our consumer business did well, due primarily to ongoing cost management, the sub-licence of Premier League content rights in Singapore and significant growth in branded postpaid mobile customers migrating to higher-tier plans in Australia.”
The consumer group’s revenue dropped 3.7 per cent to SGD2.58 billion, accounting for 58 per cent of total revenue, while group enterprise revenue edged up 0.5 per cent to SGD1.68 billion.
Mobile communications revenue declined 14 per cent to SGD1.5 billion, which Singtel attributed to higher mobile service credits from device repayment plans in Australia and lower voice and SMS revenues not fully offset by higher data. Equipment sales grew 21 per cent to SGD653 million due to higher handset sales driven by continued demand for smartphones.
Consumer revenue in Singapore increased 3.5 per cent to SGD328 million, with a 0.4 per cent drop in mobile revenue (SGD328 million) offset by a 26 per cent increase in equipment sales to SGD134 million during the quarter. Strong mobile data revenue growth in both prepaid and postpaid mitigated the decline in local and roaming voice revenues.
Fixed broadband revenue in Singapore rose 9 per cent and pay-TV turnover increased 12 per cent. The rise in home services revenue was due to strong contributions from the sub-licence of Premier League content rights and customer migration to higher-speed fibre broadband plans.
Weakness for Optus
Its Australian unit Optus saw revenue fall 9.8 per cent to AUD1.8 billion ($1.38 billion), with mobile revenue dropping 22 per cent to AUD917 million due to the reduction in mobile termination rates from 1 January 2016 and higher mobile service credits from device repayment plans. The decline in mobile was partly offset by a 17 per cent increase in equipment sales to AUD433 million.
Optus’ 4G mobile customers increased by 272,000 last quarter, taking its 4G customer base to 5.47 million at year-end.
Digital Life’s operating revenue increased 22 per cent to SGD146 million during the quarter, driven by higher advertising revenue mainly from Amobee’s social, video and display businesses.
The post-tax profit contributions from its regional associates grew by 6.1 per cent, mainly from strong results at Indonesia’s Telkomsel, the Philippines Globe and NetLink Trust, which were partly offset by declines at Airtel in India and AIS in Thailand.
Telkomsel’s pre-tax profit rose 31 per cent on the back of robust growth across data and digital businesses, but Airtel’s pre-tax profit fell 27 per cent with the combined effects of intensifying competition from a new operator, higher spectrum amortisation and financing costs, which were further exacerbated by an Indian government push to reduce the nation’s reliance on cash.
AIS continued its revenue growth momentum, leveraging its nationwide 4G network which now covers 98 per cent of the population. However, AIS’ earnings were affected by higher amortisation charges and costs incurred through the leasing of 2.1GHz spectrum and equipment from TOT. Globe’s earnings increased on stable revenues and tight cost management.
For the fiscal year ending 31 March, Singtel expects operating revenue from its core business (the consumer and enterprise units) to decline by a low single-digit rate and EBITDA to be stable. Mobile service revenue from Australia is forecast to decline by a mid-teens figure, and mobile revenue from Singapore predicted to be stable.