Singapore operator Singtel reported another year-on-year drop in quarterly profit, due to a sharp decline in the contribution from its regional mobile units and continued weakness in its domestic mobile market.
Net profit for the quarter ending 30 June (its fiscal Q1 2019) fell 6.6 per cent year-on-year to SGD832 million ($610 million), which the company said was due to lower contributions from its associates, higher withholding taxes on dividend receipts and adverse currency movements. Its profit also fell year-on-year in its fiscal Q3 and Q4 2018.
In the recent period, pre-tax earnings from Singtel’s four regional associates dropped 42 per cent year-on-year to SGD391 million, with weaker results from Airtel in India and Telkomsel in Indonesia.
Operating revenue dipped 0.5 per cent to SGD4.13 billion, with a 1.9 per cent increase in consumer revenue to SGD2.36 billion offsetting falls in enterprise (3.2 per cent) and digital life (5.4 per cent). Group mobile service turnover declined 2.2 per cent to SGD1.39 billion, while data revenue fell 1.5 per cent to SGD824 million. Equipment sales rose 13.7 per cent to SGD581 million.
Its associates’ proportionate revenue decreased 9.6 per cent from fiscal Q1 2018 to SGD3.28 billion.
In an earnings statement, group CEO Chua Sock Koong said the results reflect the resilience of Singtel’s core business against intense competition and increasing headwinds, noting “the group continued to record data growth and Optus made gains in both the consumer and enterprise markets”.
Mobile service revenue dropped 3.8 per cent year-on-year to SGD265 million, attributed to the continued impact of voice to data substitution and increased demand for SIM-only plans. Mobile data remained a growth driver, with data roaming revenues offsetting declines in voice roaming. Equipment sales grew 5.5 per cent to SGD105 million with higher take-up of premium handsets.
Blended mobile ARPU fell 2.4 per cent year-on-year to SGD35. Mobile subscribers slipped 1 per cent to 4.08 million, with a 5.7 per cent fall in prepaid subs offsetting a 2.1 per cent increase in post paid numbers.
Total mobile revenue at Optus grew 7.9 per cent to AUD1.3 billion ($964 million), driven by a 19 per cent jump in equipment sales and a 2.1 per cent increase in mobile service sales. Customer growth was partially offset by lower blended ARPU, down 2 per cent to AUD32 due to an increasing mix of SIM-only plans and data price competition.
Optus’ mobile customer base grew 4.2 per cent year-on-year to 10.2 million at end-June, with post paid numbers up 6.7 per cent and prepaid subs stable.
Singtel said mobile data continued to grow strongly for its regional associates, but Airtel’s results were affected by mandated cuts in mobile termination rates and Telkomsel’s earnings were impacted by intense price competition, particularly during a compulsory registration of prepaid SIM cards. This exercise is now complete and the pricing situation improved towards end June.
Chua noted while competition remains keen in Indonesia and India, Telkomsel and Airtel gained market share: “we have started to see revenue stabilise on a sequential quarter basis for India”.
Singtel said AIS and Globe continued to perform strongly: AIS registered robust growth from revenue improvement and cost control; Globe grew earnings on the back of data revenue growth and cost management.
Singtel forecast operating revenue from its consumer and enterprise groups to grow by a low single-digit figure and EBITDA to be stable. Mobile service revenue is tipped to grow by a low single-digit in Australia and decline by a mid single digit in Singapore.