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SingTel reports 4Q net profit climb, revenue drop

Singapore telco clocks 4 percent increase in net profit but sees revenue drop of 8 percent, closing the year with S$3.65 billion in net profit and lower operating revenue of S$16.85 billion. Growth was muted by weakening regional currencies.
Written by Eileen Yu, Senior Contributing Editor

Singapore Telecommunications (SingTel) has reported a 4 percent year-on-year climb in net profit to S$898 million (US$718.43 million) in its fourth quarter, ended March 31, fueled by growth in its local consumer business as well as from its regional mobile subsidiaries.

Significant weakening in the Australian dollar and regional currencies had dampened an otherwise higher profit growth of 13 percent, the Singapore telco said in a statement Thursday. The Australian dollar, Indonesian rupiah, and Indian rupee dipped between 11 percent and 20 percent against the Singapore dollar.

Its regional mobile associates, led by Bharti Airtel in India, made good progress rolling out their 3G network rollout and saw growth in mobile data services. SingTel's share of pre-tax earnings from these associates grew 9 percent to S$558 million (US$446.42 million), or 23 percent on constant currency. 

SingTel Group CEO Chua Sock Koong said: "Our performance held up strongly against industry challenges and currency volatility. During the year, we strengthened our market position and the efficiency of our core business [and] digital initiatives delivered to expectations, giving us the confidence to expand further into this area."

Operating revenue for the quarter dropped 8 percent, or 1 percent on constant currency, and while its domestic consumer business saw higher revenue growth, this was muted by lower consumer revenue in Australia and lower revenue from the group's enterprise business. Overall consumer revenue dipped 12 percent, or 3 percent on constant currency.  

As of end-March 2014, SingTel's combined combined mobile customer base including its mobile associates climbed 10 percent year-on-year to 514 million.

The telco saw its Singapore consumer revenue increased 5 percent, driven by growth in mobile--boosted by higher adoption of tiered 4G data plans and higher data usage--and mio TV. Revenue for the pay TV service grew 47 percent, which SingTel said was fueled by demand for its TV bundles and content which included the English Premier League and FIFA World Cup. Revenue from consumer home services, including broadband, climbed 6 percent to S$127 million (US$101.6 million). 

In Australia, SingTel-owned Optus' 4G coverage clocked 75 percent of the metro population, while 3G coverage stood at 98 percent of the national population. Revenue in the country dropped 5 percent amid lower mobile incoming revenue and equipment sales, SingTel said. 

The telco's enterprise revenue also fell 3 percent to S$1.61 billion (US$1.29 billion) for the quarter with businesses remaining cautious and amid tight pricing competition.

For the financial year, SingTel Group closed a 4 percent higher net profit of S$3.65 billion (US$2.92 billion). Operating revenue, however, dropped 7 percent to S$16.85 billion (US$13.48 billion), while EBITDA held at S$5.16 billion (US$4.13 billion). Its regional mobile associates contributed 6 percent higher pre-tax earnings. 

SingTel's free cash flow for the year dropped 10 percent to S$3.39 billion (US$2.71 billion), brought down mainly by a weaker dollar as well as higher tax payments in Australia, and working capital movements.

Chua said: "We are on track with our transformation initiatives... We will leverage our network expansion and increased penetration of 4G devices to drive customer and data revenue growth.

"The mobile internet is growing, fueled by increasing smartphone penetration and better networks. The Group's combined footprint provides a great platform for our digital services to take off and gain scale. These services will bring new revenue streams, help our [regional] associates differentiate themselves and strengthen their leadership in their markets."

SingTel last week was fined a record S$6 million (US$4.81 million) for an October 2013 fire that brought down multiple communications services and affected 270,000 subscribers including government agencies and financial institutions. The fire broke out at its Bukit Panjang Exchange on October 9, damaging fiber cables and base stations and shut down fixed voice, broadband and mobile services, as well as ATM services across the country. The incident impacted not only SingTel's own customers but customers of other telcos including M1.

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