Singtel reports 23.8% slide in 3rd-quarter profit to $627.2m

A Bharti Airtel store in Mumbai. Mr Arthur Lang, Singtel's CEO, international, said Bharti's balance sheet is "rock solid". Airtel's raising of US$3 billion (S$4.2 billion) through a share placement and convertible bond issue showed confidence in the
A Bharti Airtel store in Mumbai. Mr Arthur Lang, Singtel's CEO, international, said Bharti's balance sheet is "rock solid". Airtel's raising of US$3 billion (S$4.2 billion) through a share placement and convertible bond issue showed confidence in the firm, he said. PHOTO: BLOOMBERG

Earnings decline due to weaker enterprise numbers, lower exceptional gains

A weaker performance from the enterprise unit and lower exceptional gains helped undermine earnings at telco Singtel in the third quarter.

Net profit came in 23.8 per cent down at $627.2 million for the three months to Dec 31 last year, it reported yesterday.

The earnings decline was due mainly to weaker enterprise numbers and the final settlement of a gain on the Airtel Africa pre-initial public offering investment. There were also lower exceptional gains compared with the same period a year earlier.

Earnings per share came in at 3.84 cents, compared with 5.04 cents in the preceding year.

Operating revenue stood at $4.38 billion, down 5 per cent from $4.63 billion a year earlier. This was mainly attributable to lower equipment sales, weak business sentiment and spending, continued price erosion in its carriage services as well as heightened market competition.

Singtel highlighted increased competition in its enterprise business in Australia, where new entrants reselling the National Broadband Network has impacted revenue.

Regional associates' pre-tax profit contributions were up 15 per cent to $393 million on the back of improved operational performances of Airtel and Globe. Contributions were partly dragged down by a weaker performance from Telkomsel, which is facing slowing data growth due to intense competition outside Java, Indonesia.

Singtel reported a quarterly loss for the first time in November, after Airtel recorded a hefty provision of $5.49 billion for an Indian court judgment that ordered operators to pay the state billions in past dues.

Airtel is awaiting a Supreme Court decision after operators filed an application for modification, and has not made payments that were due on Jan 23.

Mr Arthur Lang, Singtel's chief executive, international, said: "I would say Bharti's balance sheet is rock solid today." He also pointed to Airtel's "very successful" raising of US$3 billion (S$4.2 billion) last month through a share placement and convertible bond issue that reflected market optimism around the firm.

Group chief executive Chua Sock Koong said the most immediate impact from the coronavirus outbreak would be on roaming traffic - both inbound and outbound - due to travel restrictions in Singapore and other countries.

Singtel reported a quarterly loss for the first time in November, after Airtel recorded a hefty provision of $5.49 billion for an Indian court judgment that ordered operators to pay the state billions in past dues.

But the group has also seen a greater need from customers for software and cloud-based unified communications services as more companies kick-start their business continuity plans.

No dividend was recommended for the quarter as Singtel makes payouts on a half-yearly basis. An interim dividend of 6.8 cents a share was paid last month.

The firm noted that its operations will continue to face "further intense competition and carriage declines" due to weak business and consumer sentiment.

Singtel shares closed down 1.8 per cent to $3.28 yesterday.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on February 14, 2020, with the headline 'Singtel reports 23.8% slide in 3rd-quarter profit to $627.2m'. Print Edition | Subscribe