Forex woes erode profit at Singtel

Singtel's consumer, enterprise and digital life business groups all reported expansion in the three months to Dec 31.
Singtel's consumer, enterprise and digital life business groups all reported expansion in the three months to Dec 31.PHOTO: REUTERS

Telco's Q3 net profit down 1.7%; would have been up 1% if not for currency fluctuations

Currency fluctuations hit Singtel in the third quarter despite the telco recording growth across the board.

Its consumer, enterprise and digital life business groups all reported expansion in the three months to Dec 31 last year to help revenue hit $4.5 billion, a 1 per cent increase over the same quarter in 2014.

If currency movements were factored out, growth would have been 6 per cent.

Net profit slid 1.7 per cent to $954 million, but would have risen 1 per cent if not for the foreign exchange hit, which primarily came from the fall in the Australian dollar.

The telco's net profit rose 2.9 per cent to $2.9 billion for the nine months, while revenue hit $12.87 billion, down 0.1 per cent.

  • AT A GLANCE

  • REVENUE

    $4.47 billion (+1.1%)

    NET PROFIT

    $954 million (-1.7%)

    BASIC EARNINGS PER SHARE

    5.98 cents (-1.6%)

    NET ASSET VALUE PER SHARE

    $1.54 (-0.6%)

Group chief executive Chua Sock Koong told a results briefing yesterday that the three months to Dec 31 represented the first full quarter contribution from its cyber security subsidiary Trustwave.

Acquired by Singtel last year, Trustwave contributed $75 million to turnover while the enterprise business unit's revenue came in at $1.6 billion, up 2.8 per cent.

Mobile data drove growth in Singapore, with postpaid customers shifting to higher-tier plans.

Earnings per share was 5.98 cents for the quarter, down from 6.08 cents in the same quarter a year earlier, while net asset value per share was $1.54 as at Dec 31.

Mr Yuen Kuan Moon, chief executive for consumer, Singapore, also pointed to the SIM-only plans that saw strong take-up, with new customers making up around 65 per cent of these sign-ups.

Non-SMS data like video and chat services also expanded, accounting for 41 per cent of average revenue per user, up from 36 per cent last year.

But consumer revenue dropped 4 per cent because of declines in voice roaming and IDD services.

The digital life business was up 23 per cent in the quarter, posting revenue of $120 million. Growth came from its digital marketing subsidiary Amobee which signed on new customers including Lexus and Fiat.

Singtel's Australian subsidiary Optus saw mobile revenue rise by 1 per cent while mass market fixed-line revenue grew 6 per cent.

Optus' mobile handset customer numbers increased by 41,000 while data revenue rose 10 per cent.

Ms Chua pointed to content services like video streaming services Netflix and Viu which "strengthen our core business, bringing convenience to customers".

Mr Carey Wong, investment analyst of OCBC Investment Research, said Singtel could continue "to feel the pinch from the slide in roaming revenue".

"This is due to lower voice calls, but Singtel management hopes that the increase in data usage would mitigate some of this impact," he said.

The further downsizing of global financial institutions in Singapore and the general lack of business expansion could have an impact on demand for its traditional enterprise business.

"However, the recent push into cyber security and big data analytics could provide Singtel with some resilience, given that these segments are becoming more 'mission critical' for a lot of the businesses today."

Singtel shares closed up four cents at $3.58 yesterday.

A version of this article appeared in the print edition of The Straits Times on February 13, 2016, with the headline 'Forex woes erode profit at Singtel'. Print Edition | Subscribe