A triple whammy of foreign currency movements, lower contributions from associate firms and a halt in Australia's broadband roll-out gave Singtel its worst quarter in 15 years.
Earnings for the three months to Sept 30 plunged 77 per cent to $667 million from the same period last year, the group reported yesterday.
Singtel also chalked up a $48 million exceptional loss in the second quarter, mainly on staff restructuring costs. This compares with a one-off gain of $1.94 billion last year from the sale of units in NetLink Trust. Strip out the exceptional items, and underlying net profit fell 22 per cent to $715 million.
Revenue was flat at $4.27 billion but would have grown by 3.9 per cent in constant currency terms, said Singtel, which took hits across the board.
The digital life segment lost $34 million before interest, tax, depreciation and amortisation, up from $14 million previously.
Singtel has lowered its guidance for digital marketing unit Amobee to single-digit growth, down from the mid-teens projected in May.
Mr Samba Natarajan, chief executive of group digital life, told a briefing yesterday: "Our programmatic business ... is going quite well ...but the managed media business ... is beginning to decline."
GEARING UP FOR MORE COMPETITION
We hold our position that (having) three operators is sufficient for Singapore ... but we have to face a fourth operator. Our focus will always be on the customers and it continues to be even more important in the face of the competition.
'' MR YUEN KUAN MOON, Singtel's group chief digital officer and chief executive for the Singapore consumer business, on the entry of Australia's TPG Telecom here.
The Singapore consumer segment reduced churn for the quarter and lifted operating revenue by 4.8 per cent to $555 million, led by a strong increase in equipment sales on premium handset launches.
Earnings before interest, tax, depreciation and amortisation declined by 7.4 per cent to $180 million, with lower contributions from higher-margin legacy carriage services and absence of Singtel TV sub-licence revenue for the Premier League. The unit is also bracing itself for the entry of Australia's TPG Telecom.
Mr Yuen Kuan Moon, group chief digital officer and chief executive for the Singapore consumer business, said: "We hold our position that (having) three operators is sufficient for Singapore ... but we have to face a fourth operator.
"Our focus will always be on the customers and it continues to be even more important in the face of the competition."
Singtel's group enterprise segment posted a 4.1 per cent drop in operating revenue to $1.6 billion on lower info-communications technology (ICT) sales. ICT revenue is expected to grow in the second half.
Pre-tax profit contributions from regional associates Airtel and Telkomsel fell on intense competition in India and Indonesia, but Globe in the Philippines bucked the trend and Airtel recorded positive operating results in Africa.
Mr Arthur Lang, chief executive of Singtel's international business, said: "Africa is hard to look at in one fell swoop because we're actually in 14 countries, but... generally, for most of these, Airtel is at least in the two top market positions."
Earnings per share fell to 4.09 cents from 17.49 cents last year, missing the consensus estimate of 5.1 cents. Net profit for the half year was 60 per cent lower at $1.5 billion with revenue stable at $8.4 billion.
OCBC Investment Research analyst Joseph Ng noted: "We deem this set of results to be broadly under our expectations." Nomura stuck to a "neutral" rating, citing earnings challenges.
The board approved an interim dividend of 6.8 cents a share for the half year to Sept 30, unchanged from a year earlier. Shareholders received a special dividend of three cents a share last year on gains from the NetLink Trust divestment.
Rival telcos M1 and StarHub are both changing CEOs this year so the question was inevitably put to Singtel's group chief executive Chua Sock Koong. When asked if she has a timeline to go, she said: "Maybe (it's) something that you should address to the board."
Singtel shares closed down 1.91 per cent to $3.08 after the announcement.