SingTel reported a sharp rise in its net profit for fiscal Q1, mainly due to a one-off gain, but posted slower revenue growth on a group level and a fall in mobile turnover because of the depreciation of the Australian dollar (AUD).
The operator’s net profit increased 12.8 per cent to SGD942 million ($670 million) during the quarter ending 30 June, but excluding exceptional items its underlying net profit grew 2 per cent. The company recorded a net gain of SGD47 million, with divestment gains from venture investments and Airtel Africa’s tower assets.
With the weaker Australian dollar, down 11 per cent against the Singapore dollar from a year ago, the company’s operating revenue rose 1.5 per cent to SGD4.21 billion, while EBITDA fell by 1 per cent. In constant currency terms, operating revenue would have grown by 8.3 per cent and EBITDA by 5.3 per cent. Its EBITDA margin fell to 29.5 per cent from 30.2 per cent a year ago.
Its consumer business saw revenue rise 1.9 per cent to SGD2.6 billion (up 11 per cent in constant currency terms) while EBITDA was stable. The consumer group accounted for 62 per cent of total group revenue.
Mobile revenue declined 2.8 per cent but increased 5.2 per cent in constant currency terms, with growth across Singapore and Australia driven mainly by data. Higher handset sales due to continued demand for smartphones was also a factor. Equipment sales contributed 11 per cent of total revenue during the quarter, up from 7 per cent a year ago.
Operating expenses increased 3 per cent to SGD3 billion from the same quarter last year — in constant currency terms they were up 10 per cent. The cost of sales rose 30 per cent to SGD857 million, in line with higher handset sales and digital revenues. Cost of sales accounted for 20.4 per cent of operating revenue, up from 15.9 per cent in the same quarter last year.
Singapore’s consumer revenue grew 5.8 per cent to SGD611 million, with mobile service revenue rising 3.6 per cent to SGD327 million due to strong data growth. Overall operating expenses increased by 4.5 per cent to SGD305 million, with cost of sales up 59 per cent.
In Australia consumer revenue rose 12.8 per cent to AUD1.9 billion ($1.39 billion), with mobile revenue expanding 16.6 per cent to AUD1.45 billion. Equipment sales soared 91 per cent to AUD308 million.
EBITDA grew 8 per cent, underpinned by strong mobile service revenue growth, increased take up of higher-tier plans and device repayment plans. Optus has extended its 4G coverage to close to 90 per cent of the population, with 3,787 sites, of which 2,400 have been upgraded to 700MHz.
Despite the weaker Indonesian rupiah and significant fair value losses from Airtel, SingTel’s share of pre-tax earnings from the regional mobile associates rose 5 per cent to SGD625 million. The associates’ pre-tax contributions were up 7 per cent on strong earnings growth at Telkomsel, AIS and Globe Telecom.
Indonesia’s Telkomsel registered double-digit growth in revenue (14 per cent) and EBITDA (12 per cent), boosted by a 38 per cent increase in data and digital revenues.
Airtel recorded increases in both consolidated revenue and EBITDA on continued strong operational results in India. However, its overall profits declined due to higher fair value losses and net finance costs, as well as a weaker operational performance at Africa.
Thailand’s AIS reported a 3 per cent increase in service revenue and a 14 per cent increase in EBITDA with continued growth in mobile data services. Globe’s service revenue and EBITDA both expanded by 13 per cent.
SingTel’s enterprise revenue fell 3.3 per cent to SGD1.5 billlion. In constant currency terms and adjusted for its fibre rollout business, which was transferred to NetLink Trust last October, enterprise operating revenue increased 2.6 per cent.
CEO Chua Sock Koong said the company is gaining momentum on its growth initiatives in the enterprise segment for cyber security, cloud and smart city services in Singapore and the region.
Revenue in its digital life group jumped 195 per cent to SGD102 million, mainly from Amobee’s acquisition of Adconion and Kontera last year.
For the full fiscal year, SingTel is forecasting mid single-digit revenue growth on a group basis and low single-digit EBITDA growth. It is expecting mid single-digit growth in mobile revenue in Singapore and low single-digit growth in Australia.