It was a case of another quarter, another decline in profit for Singtel.
The telco’s earnings for the three months to Dec 31 fell 14.2 per cent to $822.8 million due to lower contributions from associates, a decline in NBN migration revenue in Australia and margin erosion in traditional carriage services.
It marked the fifth straight quarter of declining profits.
Earnings have been down ever since a bumper quarter fuelled by the NetLink NBN Trust divestment bonanza in 2017.
The third-quarter results were also short of analyst estimates.
Earnings per share fell from 5.88 cents a year earlier to 5.04 cents.
Singtel’s earnings disappointment stemmed in large part from losses at key associate Bharti Airtel.
Higher voice and data use could not offset the ferocious price competition in South Asia, with Airtel also biting the bullet with higher depreciation and amortisation charges on 4G-upgrade spending.
Singtel recorded a post-tax share of losses to the tune of $77 million, compared with a post-tax profit of $37 million the previous year.
But Mr Arthur Lang, head of Singtel’s international business, noted that mobile average revenue per user in the South Asian market has still improved by 4 per cent quarter on quarter after the introduction of minimum recharge plans.
“The situation in India continues to be tough. We are monitoring it closely. But we are cautiously optimistic about it,” Mr Lang told a morning briefing yesterday.
Post-tax profit contributions also fell year on year at regional associates Telkomsel in Indonesia and AIS in Thailand, where service revenue growth was offset by handset subsidies and advertising.
But group chief executive Chua Sock Koong said in a statement that Singtel’s long-term view on its regional associates remains positive: “We expect the regional markets to revert to more sustainable market structures and deliver long-term profitable growth.”
Singtel’s operating revenue for the quarter rose 0.9 per cent to $4.63 billion, lifted by growth in information and communications technology, digital services and higher equipment sales.
Yet, despite the lift from the enterprise segment, revenue at Singtel’s core businesses dipped on a poorer showing in the consumer space.
Fixed broadband was the only major segment in the Singapore consumer business to notch turnover growth – up a modest 0.7 per cent to $58 million – amid declines in mobile services and home television and landline services.
The management now expects operating revenue from its core consumer and enterprise businesses to grow by a low single digit.
Separately, Australia’s TPG Telecom dipped its toes into Singapore waters over the year-end festive period with network pilots, joining a market already crowded by the slew of mobile virtual network operators that lease network from the operators.
Singtel consumer chief Yuen Kuan Moon said: “TPG… started some free trials and we’ve not seen a lot of activity beyond that. So the impact is really minimal.”
Maybank Kim Eng analyst Luis Hilado maintained his “hold” call on the stock, citing strong growth in Singtel’s enterprise and digital life units on economies of scale, as well as receding competition in India.
Downside risks included wireless margin compression sparked by TPG in Singapore or Australia and long-term capital expenditure for 5G technology. – Straits Times