Singtel stabilises net profit at SG$944m for first quarter FY17

Singtel has published its first quarter results ending 30 June 2016, which saw net profit stabilise at SG$944 million.

The Singaporean telecommunications provider also reported operating revenue for the quarter slipped 7 percent year on year to SG$3.9 billion; and earnings before interest, tax, depreciation, and amortisation (EBITDA) down 0.4 percent year on year to SG$1.2 billion.

The group reported its consumer division saw a 16 percent decline in revenue to SG$2.2 billion, blaming the fall on decline in equipment sales due to lower recontracting volume and the introduction of the mandated mobile termination rates in Australia that came into effect on January 1. Singtel said excluding the impact of the rate reduction, operating revenue would have only dipped 1 percent in constant currency terms.

At the same time, the division also saw a decline in voice, text, and roaming. However, a strong demand for mobile data services in Singapore helped offset this. In turn, EBITDA in Singapore stabilised at SG$215 million and revenue fell 9 percent to SG$558 million for the 1Q17.

The company further elaborated, saying its postpaid customers migrated to higher-tier plans, while more than 60 percent of its prepaid customers are now data users. Singtel believes this shift was helped by the company's introduction of mobile plans that allows customers to share data bundles of up to 50GB.

Strong performances were delivered by the company's regional mobile associates that reported a 14 percent increase in post-tax earnings for the first quarter to SG$714 million. Specifically, Telkomsel reported data customers now constitute for almost half of its mobile customer base; and Airtel in India accelerated its 4G network rollout and delivered growth in data and voice services.

"The recurring theme across all our markets is mobile data. Having invested extensively in 3G and 4G networks and services and with the rise of smartphone adoption, our associates were well-positioned to successfully drive data usage and customer growth," Singtel Group CEO Chua Sock Koong

"Across Singapore and Australia, our quality networks, differentiated content and flexible data pricing plans also helped us stand out from competitors."

Meanwhile, Singtel's enterprise division saw overall revenue grow by 5 percent to SG$1.6 billion, and EBITDA increase 1 percent to SG$490 million, pointing out the growth was underpinned by the demand of its cybersecurity services both in Australia and Singapore, with cybersecurity revenue growing to SG$109 million for the quarter. The company added the strength of its cybersecurity offering is off the back of its $810 million Trustwave acquisition last September.

"Our ICT business is getting a solid boost from new opportunities in cyber security which has emerged as a critical issue for both governments and businesses. Our capabilities and expertise in this global field, together with our trusted partners' capabilities, are winning new business," Chua said.

Singtel's Group Digital Life also delivered strong results. Revenue rose 34 percent to SG$154 million, which the company said was thanks to the expansion of each business in the division. For example, the company's digital market arm Amobee continued to extend its social media channels to include Snapchat and offer video advertising campaigns on Twitter; its geoanalytics business DataSpark expanded into Australia, Indonesia, and Thailand; and its mobile video streaming service HOOQ widened its content offering, added Hollywood titles and local content.

Singtel's Australian subsidiary Optus also published its first quarter results for FY17 on Thursday, reporting a 12 percent decline in net profit to AU$173 million, with EBITDA of AU$645 million and operating revenue of AU$2 billion.