Singtel posts 5.6% drop in Q2 profit on absence of one-off gains

Singtel Comcentre at Somerset.
Singtel Comcentre at Somerset.PHOTO: ST FILE

SINGAPORE - Singtel announced on Thursday (Nov 10) a 5.6 per cent drop in net profit to S$972 million for its second quarter compared to the year-ago period due to the absence of exceptional gains recorded by Indian associate Airtel last year.

Operating revenue for the three months to Sept 30 rose 2 per cent to S$4.28 billion, excluding the impact of mandated cuts to mobile termination rates in Australia.

The group's underlying net profit was stable for the quarter and grew 3 per cent for the half year.

Singtel said it saw robust performance from its regional mobile associates which continued to grow customers and data usage. Associates' pre-tax profits jumped 7 per cent to S$679 million.

Said Singtel group CEO Chua Sock Koong: "Our associates especially Telkomsel and Airtel performed strongly. Strategic investments in networks and spectrum are paying off as they capture new growth in customers and data usage. The group's customer base increased by 3 per cent to 629 million subscribers, further strengthening our position as South-east Asia's largest communications company."

Telkomsel's pre-tax profit jumped 22 per cent as it benefited from network investments and growth across voice, data and digital businesses.

Airtel's pre-tax profits grew a healthy 13 per cent on strong execution and lower fair value losses from Airtel Africa. Airtel further entrenched its network leadership in India with its strategic acquisition of spectrum, giving it nationwide 3G and 4G coverage.

In Thailand, AIS continued to accelerate the rollout of its 4G network, reaching 65 per cent of the population at the end of September 2016 and held its market and network leadership position. However, higher handset subsidies, spectrum amortisation and network depreciation impacted earnings this quarter.

In the Philippines, Globe is investing another US$300 million (S$419.8 million) in network expansion which would see the rollout of more LTE 700 and LTE 2600 sites across key cities nationwide.

Its Singapore business continued its growth trajectory, driven by demand in mobile data and ICT services, particularly cyber security.

On its outlook, Singtel said that taking into account its first-half performance and the revision in guidance for the Australian mobile service revenue, operating revenue for the group and for the core business are both expected to decline by low single digits.

But earnings before interest, tax, depreciation and amortisation (EBITDA) for the group and for the core business are both expected to be stable, Singtel added.

The board approved an interim dividend of 6.8 cents per share, representing a payout ratio of 56 per cent of underlying net profit for the half year.