Singtel sees stable net profit of $944m for Q1 after absence of exceptional gains

Singtel's first quarter net profit of S$944.3 million was largely unchanged from a year ago.
Singtel's first quarter net profit of S$944.3 million was largely unchanged from a year ago.PHOTO: SINGTEL

SINGAPORE - Singtel reported a largely unchanged net profit of S$944.3 million for its first quarter from S$941.6 million in the year-ago period due to comparison with exceptional profit in the previous year.

In constant currency terms, earnings was up 2 per cent for the three months ended June 30, 2016.

Earnings per share rose to 5.93 Singapore cents from 5.91 Singapore cents a year ago. No dividend was recommended - the same as for the year-ago quarter.

In the first quarter last year, the group had recorded exceptional gains on the divestment of certain venture investments and Airtel Africa's tower assets.

Its underlying net profit for the quarter grew 6.6 per cent, or 8.8 per cent in constant currency, underpinned by a resilient core business and increased contributions from regional mobile associates.

Singtel in its results announcement on Thursday (Aug 11) said mobile data services remained a key growth driver across the operations. Cyber security was another bright spot, as revenues grew on the back of last September's Trustwave acquisition.

Operating revenue for the quarter fell 7 per cent, and in constant currency fell 6 per cent, due to mandated cuts to mobile termination rates in Australia. Excluding the impact of the rate reduction, operating revenue dipped 1 per cnet in constant currency terms.

Said Ms Chua Sock Koong, Singtel Group CEO: "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. Across Singapore and Australia, our quality networks, differentiated content and flexible data pricing plans also helped us stand out from competitors."

Strong performances by Telkomsel and Airtel saw pre-tax contributions from the regional associates increase 14 per cent for the quarter to S$714 million. Telkomsel recorded strong growth across its voice, data and digital businesses and data customers now constitute almost half of its mobile customer base.

In India, Airtel continued to strengthen its market leadership and accelerate its 4G network rollout - also delivering growth in data and voice services. In Thailand, AIS successfully acquired the 900MHz spectrum, securing continuity of its network leadership while Globe in the Philippines has entered into an agreement to acquire 50 per cent of the telecom assets of San Miguel, including its 700MHz spectrum.

ICT was also a key performer as demand for cyber security services grew, with cyber security revenues of S$109 million for the quarter.

Mobile data services continued to drive growth across the consumer businesses in Singapore and Australia, mitigating the declining trends in voice and roaming, said Singtel. While overall group revenue fell on service credits from device repayment plans in Australia and lower equipment sales across both markets, EBITDA held stable, with reduced traffic expenses, lower mobile acquisitions and retention costs.

In Singapore, strong demand for mobile data services offset declines in voice, text and roaming as postpaid customers migrated to higher-tier plans.

Singtel said domestic revenue was boosted by popular content offerings such as the UEFA Euro 2016 and Copa America 2016 football as well as increased take-up of higher speed fibre broadband plans.