Singtel sees fourth quarter double digit falls in revenue and earnings

Net profit for Singaporean telco group down by a quarter, while associates continue to grow.

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The impacts of Singtel's telco associates are once again the rare bright spots within a fourth quarter that saw revenue and earnings contract.

Operating revenue for the three months to the end of March was down 10% to SG$3.9 billion for the entire Singtel group, with earnings before interest, tax, depreciation, and amortisation (EBITDA) down by 11.5% to SG$1.03 billion, and net profit down by one quarter to SG$574 million.

For the quarter, the associates collectively grew pre-tax profit by 20.5% to SG$505 million and post-tax profit by 17% to SG$386 million.

Much of the gain was thanks to Airtel turning its SG$12 million operating loss from India and South Asia into a SG$86 million operating profit, while its African business increased its operating profit by 9% to SG$89 million. When taken together and after applying tax, Airtel reduced its SG$90 million post-tax loss from last year to a SG$23 million loss this quarter.

Among the other associates, Telkomsel in Indonesia increased its post-tax contribution by 10% to SG$247 million; Globe in the Philippines increased its contribution by 2.4% to SG$84 million; while AIS and Intouch in Thailand went backwards, posting declines of 7.4% to SG$70 million and down 2.4% to SG$20 million, respectively.

"Our regional associates have performed resiliently against the challenges of their respective operating environments. While the lockdowns introduced across their markets in March may impact results in the upcoming quarter, investments in their network and digital infrastructure are paying off as these are more essential than ever to keeping customers connected during this pandemic," Singtel CEO Chua Sock Koong said.

"The price war and consolidation in the Indian telecoms market of the last two years has turned the corner into a phase of market repair, with Airtel gaining market share in a three-player market. With the provisioning for Airtel's spectrum charges and licence fees, we can put those issues behind us and help our associate accelerate its growth momentum."

Airtel had previously been pinned as being a drag on Singtel's profitability in recent quarters.

Back on Singtel's Singaporean home turf, the consumer group saw operating revenue fall by 14% to SG$465 million while EBITDA increased 5% to SG$181 million.

Broken down, sales of mobile services was down 12% to SG$218 million, equipment sales plummeted by 35% to SG$92 million; while fixed broadband revenue increased 3% to SG$64 million. Pay TV, meanwhile, grew 1.4% to SG$50 million and fixed voice increased by 0.7% to SG$28 million. The telco said the drops in sales were due to roaming and prepaid services being hit by coronavirus travel restrictions, resulting in fewer tourists and foreign workers, while equipment sales were hit by "supply disruptions for certain handsets".

The telco said it had increased the number of postpaid subscribers to 2.7 million, up 5%, while prepaid fell 2.7% to 1.58 million. Average revenue per user fell 9.6% year on year on prepaid to sit at SG$14 each month, while postpaid was also down 12.5% to SG$33 per month.

A lack of roaming was also pointed to as a reason for the enterprise group's revenue falling by 5% to SG$1.6 billion, as carriage services fell 13% to SG$688 million and IT services grew by 4% to SG$871 million. Singtel said enterprise results would have only been down 1.5% had it not been for its underperforming Australian enterprise division.

For Singtel's digital life division, its HOOQ brand was put into liquidation, which was highlighted as the reason for its negative EBITDA being reduced from SG$18 million last year to SG$4 million.

In Australia, the Singtel-owned Optus saw its quarterly revenue drop by 8.6% to AU$2.1 billion; EBITDA cut by 25% to AU$562 million; and net profit crater by 84% to AU$37 million.

For the full year, Singtel Group saw revenue fall by 5% to SG$16.5 billion, EBITDA drop 3% to SG$4.5 billion, and underlying net profit fall 13% to SG$2.46 billion. However, once SG$1.38 billion in extraordinary items were added in -- primarily from Airtel needing to make provisions for levies following an October ruling at the Indian Supreme Court -- post-tax net profit fell 65% to SG$1.08 billion.

"This has been a challenging year, given structural shifts in the industry, already soft economic conditions, adverse regulatory outcomes in India and the onset of COVID-19 in the fourth quarter," Chua said.

"It will be some months before the full impact of COVID-19 on our business can be ascertained. However, the lockdown has accelerated unprecedented digital adoption.

"We have witnessed the accelerated take-up of our digital services by both consumers and enterprises trying to meet business demands under the current circumstances."

Due to COVID-19, Singtel did not provide any forecast for its next fiscal year.

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The telco's enterprise business arm was the only bright spot compared to the year prior.