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Singtel’s quarterly profits fall 35%

SINGAPORE — Singtel’s profits slumped by 35 per cent year-on-year in the quarter ending on June 30, with losses from its Indian subsidiary Bharti Airtel dragging down the group’s overall earnings, the telco announced on Thursday (Aug 8).

The latest quarterly result follows a weak financial year ending March 31, which saw Singtel posting its smallest annual profit in 16 years.

The latest quarterly result follows a weak financial year ending March 31, which saw Singtel posting its smallest annual profit in 16 years.

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SINGAPORE — Singtel’s profits slumped by 35 per cent year-on-year in the quarter ending on June 30, with losses from its Indian subsidiary Bharti Airtel dragging down the group’s overall earnings, the telco announced on Thursday (Aug 8).

The profits fell to S$541 million, compared with S$832 million in the same period last year. The performance was well under analysts’ expectations of between S$660 million to S$700 million. Excluding Airtel, net profits would have fallen by 3 per cent year-on-year, Singtel said.

Singtel Group chief executive Chua Sock Koong said that aside from the impact of Airtel on the group, the “business is stable”.

 “This was achieved against a backdrop of heightened competition, sustained industry headwinds and subdued economic growth,” she said. “We are focused on the digitalisation of our core communications business where innovations in digital products and services are proving to be key differentiators, leveraging our network superiority.”

The group is driving productivity gains and cost savings through digitalisation, she added.

The latest quarterly result follows a weak financial year ending March 31, which saw Singtel posting its smallest annual profit in 16 years.

Between April and June, operating revenue for the group went up 2 per cent in constant currency terms to S$4.11 billion, thanks to growth in its Australian consumer arm and the scaling up of Singtel’s digital business.

The debt-laden Airtel, which is India’s largest telecom operator, has reportedly been struggling to raise prices and gain subscribers amid strong competition. It has had to maintain its 2nd generation and 3rd generation cell networks while expanding its 4th generation (4G) network capabilities.

Singtel’s other regional associates, such as Indonesia’s Telkomsel, saw continued customer growth and data usage. Excluding Airtel, these regional businesses would have seen a revenue increase of 10 per cent year-on-year, led mainly by Telkomsel’s 18 per cent boost to earnings.

Overall pre-tax earnings contributions from Singtel’s regional associates fell 14 per cent year-on-year as higher network costs, depreciation and finance charges from Airtel’s 4G network expansion affected financial performance, said Singtel.

In Singapore, mobile revenue remained stable as higher equipment sales helped offset the fall in local and roaming voice services, it added. However, the earnings before interest, taxes, depreciation and amortisation (EBITDA) for the Singapore consumer group in the latest quarter fell 4 per cent year-on-year.

The entry of new mobile virtual network operators (MVNO) and the launch of all-digital products by the incumbent telcos, such as Singtel’s all-digital, no-contract Gomo plans, has raised competition in Singapore’s telco industry. Reflecting the strong demand for these plans, Singtel said it added 35,000 postpaid customers in April to June.

EBITDA for the group’s enterprise division fell 7 per cent year-on-year, mainly due to carriage erosion and price reduction on major government infocomm technology contracts, while its consumer division in Australia climbed 9 per cent year-on-year primarily due to increased revenue from the migration to a new network being rolled out across the country.

Overall EBITDA for the group declined 1.9 per cent year-on-year to about S$1.18 billion, from about S$1.21 billion previously.

OCBC Investment Research said that Singtel’s results in the latest quarter were below expectations. Nevertheless, it noted that the group had upgraded its EBITDA guidance for the financial year ending March 31, 2020, to grow by a “high single digit” — an improvement from its previous “stable” forecast.

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