Weaker currencies rein in Singtel's earnings in Q1

A Singtel (Singapore Telecom) logo is seen on its buillding in Singapore on Aug 11.
A Singtel (Singapore Telecom) logo is seen on its buillding in Singapore on Aug 11. PHOTO: AFP

Higher revenue contributions from India and Indonesia offset by lower Aussie takings

The weaker Australian dollar and falls in other regional currencies kept a lid on Singtel's earnings in the first quarter.

Net profit at the telco came in at $944 million in the three months to June 30, little changed from a year ago. Earnings would have been 2 per cent higher if not for the weaker currencies.

Operating revenue fell 7.1 per cent to $3.9 billion as higher contributions from Telkomsel in Indonesia and Airtel in India were offset by lower takings from Optus, Singtel's Australian subsidiary.

The group's consumer business revenue fell 15.6 per cent in the quarter from a year earlier to $2.2 billion, dragged down by the mandated mobile termination rate cuts in Australia that kicked in on Jan 1.

  • AT A GLANCE

  • REVENUE: $3.9 billion (-7.1%)

    NET PROFIT: $944 million (+0.3%)

    DIVIDEND: none

Otherwise, mobile data consumption continued to drive growth across the region, while demand for voice, text and roaming services declined.

In Singapore, consumer revenue dipped 8.5 per cent from a year earlier on lower handset sales and international services fees.

But core profit was stable because the lower recontracting volumes also knocked down customer acquisition and retention costs, while traffic expenses also fell.

Mr Yuen Kuan Moon, chief executive of consumer business in Singapore, told a briefing yesterday that there has been a "slow gradual increase" in the number of new customers taking up SIM-only plans but this was seasonal and people were likely holding out for the new smartphones due out later this year.

Singtel's enterprise business revenue expanded 5.1 per cent to $1.6 billion in the first quarter. Trustwave, which was acquired last September, helped push cyber security revenues up to $109 million.

Operating losses in the digital life business widened as over-the-top video-streaming service Hooq ramped up content and marketing costs. Amobee, Singtel's digital marketing arm, posted a 30 per cent increase in revenue.

First-quarter earnings per share was 5.93 cents, up from 5.91 cents a year ago, while net asset value per share was $1.59 as at June 30, up from $1.57 as at March 31.

And while some analysts have tipped that the Pokemon Go craze could give telcos here a boost by driving up data usage in-app and across social media, Singtel said it was too early to tell.

"It's not really a high data-generating app, because you're just sending small uploads," said Mr Yuen.

Singtel did not give an estimate, but rival telco StarHub said in a statement that the app utilises about 20MB for every hour of play.

Earnings were announced before markets opened.

Singtel shares closed seven cents up at $4.27 yesterday.

A version of this article appeared in the print edition of The Straits Times on August 12, 2016, with the headline 'Weaker currencies rein in Singtel's earnings in Q1'. Print Edition | Subscribe