Singtel Q3 profit falls 27.6% but underlying profit up on Airtel’s performance

Third-quarter operating revenue fell 5.1 per cent after the divestment of unit Amobee and a steep drop in the Australian dollar. PHOTO: ST FILE

SINGAPORE – Singtel has posted a net profit of $532 million for the third quarter ended December 2022, down 27.6 per cent from the $734 million a year ago that was boosted by exceptional gains.

The company recorded a net exceptional loss of $28 million for the quarter as opposed to a net exceptional gain of $261 million previously, which was boosted by a net gain from the disposal of a 70 per cent equity stake in Indara Corp, known at the time as Australia Tower Network.

In a business update on Thursday, Singtel said its latest quarter’s net exceptional loss was mainly due to a significant receivable provision by Airtel’s tower associate for a major customer. Airtel is partly owned by Singtel.

Operating revenue for the third quarter fell 5.1 per cent year on year to $3.7 billion from $3.9 billion in the absence of contributions from the group’s divested subsidiary Amobee, and with a steep decline in the Australian dollar over the period.

For the same reasons, earnings before interest, taxes, depreciation and amortisation (Ebitda) was down 8 per cent at $911 million from $990 million a year ago.

Underlying revenue – which is on a constant currency basis and excludes contributions from Amobee and subsidiary Optus’ migration of its customers to Australia’s national broadband network (NBN) – rose 6 per cent, while underlying Ebitda fell by 3.2 per cent.

Underlying net profit rose 18 per cent to $559 million from $473 million, due to the strong growth momentum of Airtel.

In Singapore, the operating revenue of the group’s consumer business rose 3 per cent due to higher mobile service revenue, which grew on the back of increased travel, and higher pre-paid sales driven by 5G and the return of foreign workers.

This was partially offset by lower pay TV revenue as well as lower mobile equipment sales, which contracted due to supply constraints of certain premium handsets and reduced demand for mobile equipment plans.

Ebitda for the Singapore consumer segment grew 13 per cent on the back of the higher service revenue.

Group enterprise operating revenue fell a marginal 0.8 per cent as higher roaming and information and communications technology revenues were offset by declines in mobile equipment sales and voice services.

Overall, the group said this segment’s 1.3 per cent decline in Ebitda reflected a higher mix of lower-margin products.

Despite achieving strong revenue growth of 21 per cent, Singtel’s technology services arm NCS reported a 29 per cent decline in Ebitda due to higher operating expenses. The group said NCS is taking steps to optimise its overall cost structure and deliver improved margins.

The operating revenue of Singtel’s cyber-security arm in the United States, Trustwave, fell 55.1 per cent over the quarter after transferring its Asia-Pacific business to Singtel, NCS and Optus as at April 1, 2022.

Its loss before interest, taxes, depreciation and amortisation narrowed slightly due to tight cost management, said the group.

For the nine months ended December 2022, Singtel’s operating revenue was down 5.1 per cent at $11 billion and Ebitda declined 4.5 per cent to $2.8 billion.

This was mainly due to the absence of NBN migration revenue and contributions from Amobee, exacerbated by the depreciation of the Australian dollar.

On an underlying basis, operating revenue for the nine-month 2023 financial year grew 4.9 per cent and Ebitda rose marginally by 0.8 per cent.

Commenting on the latest set of results, Singtel group chief executive Yuen Kuan Moon said he expects NCS’ margins to improve as the cost of scaling and business eases in the coming quarters.

“We are keeping a tight rein on the group’s business costs in the current inflationary environment while balancing the need to invest in growth and innovation as we steadily execute our strategic priorities against this uncertain economic backdrop,” he said.

Singtel shares ended two cents, or 0.8 per cent, higher at $2.47 on Thursday. THE BUSINESS TIMES

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