SINGAPORE – Lacklustre results, hampered by provisions made at two key overseas units, dampened the mood at Singtel in the third quarter.
Net profit at the telco dived 13 per cent to $465 million in the three months to Dec 31, 2023, largely due to India’s Airtel and problems at Optus in Australia, it noted in a business update on Feb 23.
Optus faced customer churn and price erosion, while Singtel has made a $54 million provision for the November nationwide network outage.
The firm also took a hit after the African businesses of its associate, Airtel, suffered currency weakness despite the Indian operations turning in a solid performance.
Singtel’s operating revenue was down as well, slipping 3.2 per cent to $3.6 billion. There were two main culprits: the absence of contributions from Trustwave that was sold in October 2023, and a 4 per cent depreciation in the Australian dollar. However, underlying net earnings rose 1.5 per cent to $559 million in constant currency terms for the quarter.
Chief executive Yuen Kuan Moon said: “Our underlying financial results in the third quarter were stable despite a tough macroeconomic environment and persistent currency headwinds.”
He also noted that steps had been taken at Optus to increase network resilience since the outage.
“We are confident that our strong balance sheet and our priorities to improve the operational efficiencies of our core business and scale our growth engines will drive long-term value and returns,” Mr Yuen said.
DBS Bank analyst Sachin Mittal said Singtel’s latest update is “a very different set of results from the previous few”.
“Core operating profit from Singapore and Australia appears on track,” he noted, adding: “The usual hero – Bharti – disappointed, not due to its operating performance but due to the depreciation of African currencies, especially the Nigerian naira.
“We were worried about Optus due to the network outage last year, but it was able to grow its customer base in the quarter.”
Singtel Singapore was buffeted by a challenging environment amid weak domestic corporate and consumer spending.
Revenue slid 2.1 per cent while Ebitda (or earnings before interest, tax, depreciation and amortisation – a measure of profitability) fell 4.9 per cent.
This came amid declines in legacy voice and pay TV, along with mobile equipment sales that had contracted on the back of an increased popularity of SIM-only plans and longer device replacement cycles.
Nevertheless, Mr Mittal believes Singtel’s Singapore operations should find solace in “the ongoing cost reduction, coupled with growth by both NCS and the data-centre segment, which can potentially address this challenge until the mobile sector consolidates”. NCS is Singtel’s multinational information-technology subsidiary.
Revenue at Singtel’s data-centre business, Digital InfraCo, grew 16 per cent on the back of price up-lifts, utility pass-through, and fees from project-based satellite deployment services.
Separately, Singtel initiated the formation of an alliance to create the world’s first cross-border programme to provide customers with access to local rewards when they travel to any of the corresponding markets.
This alliance comprises regional telcos AIS in Thailand, Globe in the Philippines, HKT in Hong Kong, Optus in Australia, Taiwan Mobile in Taiwan and Telkomsel in Indonesia.
Customers will be able to earn and make use of rewards for activities that include dining, transportation, shopping and other services.
The programme will be rolled out from the second half of 2024, with the goal of expanding in the future.
