Singtel announces SG$3.87b net profit for FY16

Singapore's incumbent telco recorded a net profit of SG$3.87 billion on EBITDA of SG$5.01 billion and operating revenue of SG$16.96 billion for the 2016 financial year.

Singtel has reported its financial results for FY16, announcing a net profit of SG$3.87 billion, up 2.4 percent year on year from the SG$3.78 billion recorded at the end of March 2015.

The Singaporean telecommunications provider's earnings before interest, tax, depreciation, and amortisation (EBITDA) were SG$5.01 billion for the year, down 1.5 percent from SG$5.09 billion, on operating revenue of SG$16.96 billion, down 1.5 percent from SG$17.22 billion.

Free cash flow for the year was SG$2.72 billion, down 23.4 percent from SG$3.55 billion due to increased investments and receipts from the completion of its OpenNet fibre rollout in Singapore last year.

In terms of quarterly results, Q4 saw net profit of SG$946 million, up 0.8 percent from SG$939 million; EBITDA of SG$1.26 billion, down 0.9 percent from SG$1.27 billion; operating revenue of SG$4.09 billion, down 5.6 percent from SG$4.34 billion; and free cash flow of SG$681 million, down 29.3 percent from SG$964 million. Foreign currency movements against the Singaporean dollar impacted the company's net profit by SG$27 million for the quarter.

Singtel attributed its profit to mobile data take-up as well as growth in its ICT business consisting of cloud and cybersecurity offerings.

"Mobile data was the bright spot; our regional markets are now making their respective transitions from mobile telephony to mobile internet, and harnessing the benefits of extensive investments in 3G and 4G networks and services," said Singtel Group CEO Chua Sock Koong.

"We worked with our regional associates to navigate this shift from voice to data. In Singapore and Australia, our businesses were the first to launch innovative data add-on plans and zero-rated music services to meet customers' increasing demands for OTT content services and data allowances, driving further data monetisation.

"Our ICT business is delivering strong results in spite of the slowing global economy," she added. "Government agencies and businesses are increasingly turning to cloud computing and data analytics to drive productivity and manage large amounts of complex data. We have been able to strengthen the business with our investments in talent and capability building."

Singtel attributed its falling operating revenue to the decision by the Australian Competition and Consumer Commission (ACCC) in August to reduce charges by more than half for mobile termination rates as of January 1. The effect of mobile termination rates declining on Singtel's operating revenue was specified as being SG$188,000 from January to March.

Net assets as of the end of March were SG$25 billion, up 0.95 percent from SG$24.77 billion, while net debt stood at SG$9.14 billion, up 14.8 percent from the SG$7.96 billion recorded at the end of March last year.

Operating expenses totalled SG$12.1 billion for the year, down 1.5 percent from SG$12.28 billion. Of this, the cost of sales contributed SG$3.66 billion, up 16.1 percent; selling and administrative expenses reached SG$3.39 billion, down 9.9 percent due to lower customer acquisition and retention costs in both Singapore and Australia; staff costs were SG$2.46 billion, down 0.4 percent; traffic expenses were SG$2.21 billion, down 13.2 percent; and repair and maintenance was up by 5.7 percent, to SG$359 million.

Positive operating revenue contributors by products and services were managed services, including cybersecurity revenue, which added SG$1.87 billion in total revenue, up 3.6 percent year on year; business solutions with SG$637 million in revenue, up 5.6 percent; ICT contributed SG$2.5 billion, up 4.1 percent; sale of equipment added SG$1.8 billion, up 15.9 percent; and digital businesses -- including Amobee, HOOQ, AMPed, Dash, inSing.com, and Hungry-Go-Where -- contributed SG$476 million, up 42.9 percent.

Products and solutions that experienced falling revenue over the year were mobile communications, which contributed 7.3 percent less, at SG$6.71 billion; data and internet, which was down by 1.2 percent to SG$3.14 billion; national telephone, which was down by 11.8 percent to SG$1.13 billion; international telephone, down 13.7 percent to SG$542 million; and pay TV, down 5.6 percent to SG$285 million.

Singtel's group consumer business' yearly EBITDA was SG$3.27 billion, down 1.2 percent from SG$3.3 billion, on operating revenue of SG$10.1 billion, down 4.6 percent from SG$10.59 billion, and opex of SG$6.97 billion, down 5.8 percent from SG$7.4 billion. For the quarter, EBITDA was down by 1.4 percent, operating revenue was down by 12.7 percent, and opex spending was 18.3 percent less.

Group enterprise reported an FY16 EBITDA of SG$1.96 billion, down 3.9 percent year on year from SG$2.04 billion; operating revenue of SG$6.4 billion, up 1.3 percent from SG$6.32 billion; and opex cost 3.5 percent more, at SG$4.47 billion. On a quarterly basis, EBITDA was down by 4.5 percent, operating revenue was up by 4.6 percent, and opex cost 7.6 percent more.

A breakdown of Singtel's enterprise operating revenue for the year saw managed services, including Trustwave, facility management, managed and network services, and value-added reselling and services, add SG$1.4 billion, up 17.2 percent year on year; business solutions add SG$637 million, up 5.6 percent; data and internet contribute SG$1.36 billion, up 4.8 percent; mobile communications provide SG$809 million, up 0.4 percent; international telephone add SG$201 million, down 7.8 percent; national telephone add SG$176 million, down 2.5 percent; and sale of equipment grow by 14.2 percent, up to SG$114 million.

Singtel attributed its loss in enterprise EBITDA to foreign currency movements, as well as increased staff costs after expanding its cybersecurity, cloud, and smart nation businesses in response to growing demand.

Singtel's Group Digital Life business made an EBITDA loss of SG$137 million, though this was less than last year's SG$180 million loss. Operating revenue grew by 45.3 percent to SG$454 million and opex increased by 20.5 percent to SG$588 million. The EBITDA and revenue growth was due to higher advertising revenue from mobile, video, and social; Amobee adding clients such as Airbnb, Red Bull, and Paypal; and greater uptake of DataSpark. Video-streaming service HOOQ was also launched in Indonesia.

Singtel's Singaporean mobile communications business contributed SG$2.12 billion in revenue, up 1.2 percent year on year from SG$2.09 billion. Singtel now has 1.77 million prepaid subscribers, having lost 49,000 over the year or 6,000 over the quarter, and 2.33 million post-paid subscribers, gaining 62,000 over the year or 6,000 over the quarter.

Prepaid average revenue per user (ARPU) on a monthly basis is SG$18, down by SG$1 year on year, while post-paid ARPU is SG$72, down by SG$3 year on year. Prepaid market share stands at 52.7 percent, down by 1.2 percent; post-paid market share is 47.7 percent, down by 0.3 percent; and overall mobile market share is 49.8 percent, down by 0.6 percent.

Singtel's Singaporean mobile business now has 2.29 million 4G subscribers, 417,000 more than a year ago and 85,000 more than a quarter ago.

Singtel's TV business lost SG$4 million in revenue over the year, down 1.7 percent to SG$232 million, with ARPU also decreasing by SG$1 to SG$39. Residential TV customers numbered 423,000 as of the end of March, the same as a year ago but down by 1,000 from last quarter.

Singapore consumer home revenue, taking into account Singtel TV, fixed broadband, and fixed voice, was SG$526 million, down by 0.6 percent from SG$529 million for the year. Blended ARPU was SG$61, the same as a year ago.

The number of fixed broadband lines grew by 11,000 over the year to 599,000, with a 42.5 percent fixed broadband market share, up slightly from 42.4 percent. Fibre broadband lines numbered 501,000, up by 83,000 over the year for a 51 percent market share.

Singtel now has 816,000 residential fixed working lines in Singapore for national telephone, down by 28,000 over the year, and 716,000 business fixed working lines, down by 19,000 over the year. Its fixed-line market share for national telephone was 75.9 percent, down by 3.2 percentage points.

Singtel's Australian subsidiary Optus also published its financial results for FY16, reporting a net profit of AU$901 million on EBITDA of AU$2.77 billion and operating revenue of AU$9.12 billion.