Airtel takes shine off Singtel second quarter

Indian telco drags results lower as Singaporean telco disperses SG$2 billion gained from NetLink IPO.

Singtel has announced record net profit in its second quarter, following the SG$2.1 billion selling off of its stake in Singapore's fibre network builder NetLink Trust.

Overall, Singtel posted a 7 percent increase in operating revenue to SG$4.3 billion, with earnings before interest, tax, depreciation, and amortisation (EBITDA) rising 5 percent to SG$1.2 billion, and net profit coming in at SG$2.9 billion.

However, the profit contribution from its overseas associate telcos dropped by almost 11 percent, leading to an underlying net profit of SG$929 million, which was down 4 percent year on year.

In the case of Airtel, its India and South Asia operation experienced a drop in its operating results of one-third to SG$196 million from SG$292 million a year prior. In Africa, Airtel more than tripled its operating result, posting SG$65 million. Together with an increase in costs, Airtel's contribution to Singtel more than halved year-on-year to SG$83 million.

"Excluding Airtel, pre-tax and post-tax underlying profit contributions increased 6.4 percent and 8.7 percent respectively," Singtel said in its results.

"Airtel recorded weaker revenue and earnings as it continued to face disruptive price competition in India."

Within Singapore, Singtel saw a 2 percent drop in its consumer business revenue, with mobile communications revenue down 3 percent due to the continuing switch from voice to data. This was coupled with a 7 percent drop in average revenue per postpaid user, a 5 percent drop in prepaid subscribers, and a 3.5 percent increase in postpaid subscribers.

However, the Singapore consumer business grew EBITDA by 6 percent, citing "strong" cost management.

For its Singapore enterprise division, revenue increased by 4 percent to SG$1.25 billion, but EBITDA slipped 8 percent to SG$403 million.

Singtel's digital life group saw revenue jump 89 percent thanks to its Amobee digital marketing business doubling its quarterly revenue YoY to SG$274 million as well as becoming EBITDA positive, leading the digital life group to half its EBITDA loss to SG$14 million.

Looking ahead to the closing of its fiscal year in March, Singtel expects its mobile communications revenue in Singapore to continue its decline, Amobee to breakeven for the year, and for overall revenue and EBITDA to grow by single digits.

Singtel's Australian operation, Optus, reported another solid but not spectacular quarter on Thursday, with the telco seeing its operating revenue remain flat and earnings grow on the back of reduced expenses.

For the quarter ending September 30, the company reported a 4.4 percent YoY increase in EBITDA to AU$661 million from AU$2.1 billion in operating revenue, which saw a 0.2 percent increase.

As of the end of the quarter, Optus had a headcount of 8,278, down from the 8,896 reported at the same time last year.

In August, Singtel announced the rollout of its Cat-M1 IoT network across Singapore.

Earlier in the year, the telco paid SG$564 million in the April Singapore spectrum auction to 3x 5MHz in the 2.5GHz band, 4x 10MHz in the 700MHz band, and 2x 10MHz in the 900MHz band.

In September, the company said it would no longer deploy copper-based or ADSL services to commercial buildings from April next year, in favour of fibre networks.

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