SingTel Q2 flat amid cautious biz sentiment, currency headwinds

Summary:The telco's regional associates expects its enterprise customers to be cautious in spending for the next 12 months amid keen competition. Q2 was held back particularly by a weaker Australian dollar and overall capex investments.

SINGAPORE--SingTel posted largely flat second quarter net profit on the back of cautious business environment and keen competition, while capital expenditure by its regional associates and a stronger Singapore Dollar weighed on the bottomline.

For the three months ended September, Southeast Asia's largest telco booked a 0.3 percent rise in net profit at S$870 million ($696.78 million). This was on the back of a 9 percent dip in group revenue at S$4.16 billion from the same period last year, which it attributed largely to a weaker Australian dollar. The Australian currency, Indian Rupee and Indonesian Rupiah each depreciated by 10 percent year-on-year against the Singapore Dollar, pointed out SingTel.

The Singapore consumer segment was up 3 percent in revenue at S$567 million. This was driven by mobile revenue which rose 7 percent to S$318 million from higher data usage as more customers exceeded their data bundles and upgraded to higher-tiered 4G plans, said SingTel.

singtel regional assoc
(source: SingTel)

Cautious spending ahead

There were also headwinds from a cautious business environment seen across its enterprise segment, which saw revenue dip 4 percent amid keen competition.

The cautious sentiment is likely to carry forward to the next 12 to 18 months and has been primarily coming from its European and American multinational companies (MNCs), said Bill Chang, CEO of group enterprise, at the earnings briefing.

"The MNC spending will probably be curtailed to a point at least for another 12 months we see that," added Chang. He noted there were signs of strength from Japanese MNCs and the SMB segment appeared resilient.

While the total number of mobile customers across the group rose by 7 percent to 486 million, its Australian unit Optus saw its customer base drop by 38,000. Still, it noted Optus' churn rate was lower, going to 1.3 percent at the end of September, from 1.5 percent at the end of June.

Going forward, the telco said it was strengthening its core businesses further and increasing collaboration between regional associates in the digital space, such as with its lifestyle , mobile advertising and news services.

"In the developing markets where our regional mobile associates operate, millions of customers are experiencing the Internet for the first time via their mobile phones. To encourage data usage and ensure a positive user experience, our associates are investing significantly in mobile infrastructure and content," said group CEO Chua Sock Koong.

When asked about the feasibilty of a separate geo-redundant mobile network mooted by Singapore's telecom minister earlier this week to improve the sector's resiliency , Chua said it was too premature to discuss the level of additional capital expenditure required. She pointed out SingTel had already built a level of redundancy in its networks and would need to wait for what the prescribed level, if any, would be.

Topics: Telcos, Networking, Singapore, SingTel

About

Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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