Singapore Telecommunications (Singtel) saw its operating revenue grow 2 percent to SGD 4.28 billion in the quarter ended 30 September 2016. The figure excludes declines in Australian mobile termination rates. Singtel said its associates, especially Telkomsel and Airtel, performed strongly in the quarter. The Group’s customer base increased by 3 percent to 629 million subscribers. Net profit fell 6 percent to SGD 972 million due to exceptional gains recorded by Airtel in the comparative quarter.
Core business sees sustained growth in mobile data and cyber security, moderated by voice to data substitution and heightened competition in Australia, the company said. Mobile data boosted regional mobile associates’ earnings with pre-tax contributions up 7 percent to SGD 679 million. Underlying net profit was stable for the quarter. Net profit increased by 3 percent for the half year ended 30 September 2016.
Telkomsel’s pre-tax profit jumped 22 percent as it benefitted from network investments and growth across voice, data and digital businesses. Airtel’s pre-tax profits grew by 13 percent on strong execution and lower fair value losses from Airtel Africa. Airtel further entrenched its network leadership in India with its strategic acquisition of spectrum, giving it nationwide 3G and 4G coverage.
In Thailand, AIS continued to accelerate the rollout of its 4G network, reaching 65 percent of the population at the end of September 2016. However, higher handset subsidies, spectrum amortisation and network depreciation impacted earnings this quarter. In the Philippines, Globe is investing another USD 300 million in network expansion which would see the rollout of more LTE 700 and LTE 2600 sites across key cities nationwide.
Strong data growth across the consumer businesses in Singapore and Australia mitigated the effects of declining voice usage. However, Group Consumer revenue was down 8 percent, due to mandated reductions in mobile termination rates in Australia. EBITDA declined 6 percent due to higher investment in content and heightened competition in Australia. Optus’ 4G coverage now reaches 95.7 percent of the population, parent company Singtel reports.
In Singapore, demand for mobile data driven by increased consumption of mobile video helped offset declines in voice. However, revenues fell 3 percent due mainly to lower equipment sales pending the release of new handsets combined with the effect of lower-priced Android handsets. EBITDA fell 1 percent, mainly due to trade foreign exchange gains in the comparative quarter.
Group Enterprise saw its revenue grow 5 percent on the back of cyber security and international data services. Cyber security revenue increased to SGD 129 million contributed by Trustwave and other strategic collaborations. However, EBITDA fell 2 percent, due to declines in carriage revenues, lower mobile roaming and price pressures on ICT services. Group Digital Life’s revenue climbed 26 percent, boosted by digital marketing arm Amobee’s strong performance in social, video and display advertising.
Singtel Group’s performance for the half year ended 30 September 2016 was impacted by moderating growth from heightened competition in the mobile market in Australia. As a result, mobile service revenue from Australia for the financial year ending 31 March 2017 is expected to decline by mid teens. Taking into account the first half performance ended 30 September 2016 and the revision in guidance for the Australian mobile service revenue, operating revenue for the Group and for the Core Business (comprising Group Consumer and Group Enterprise) are both expected to decline by low single digit. EBITDA for the Group and for the Core Business are both expected to be stable. Other than the above, the Group affirms the guidance issued in May 2016.
