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SingTel 'resilient' in Q1 2014/15, despite net profit, revenue and EBITDA all falling

SingTel 'resilient' in Q1 2014/15, despite net profit, revenue and EBITDA all falling

Net profit declined 17 per cent to $S835 million

Optus’ parent company, Singapore Telecommunications Limited (SingTel), has labelled its Q1 2014/15 performance as “resilient” despite major investments to support business transformation and currency headwinds and drops in net profit, revenue and EBITDA.

Underlying net profit dipped 2 per cent to $S881 million for the quarter ending June 30, 2014. In constant currency terms, underlying net profit would have grown 5 per cent, SingTel said.

Net profit, impacted by exceptional items, declined 17 per cent to $835 million and would have been down 12 per cent in constant currency terms. In the same quarter last year, an exceptional gain of $S150 million was recognised from the dilution of the Group’s stake in Airtel. This quarter’s results included staff restructuring costs of $S27 million and a $S17 million share of Airtel’s exceptional loss for various disputes and provisions.

Revenue and EBITDA were down 3 per cent to $S4.15 billion and $S1.25 billion, respectively, but the company again underscored they would have been stable in constant currency terms.

Constant currency basis amounts are calculated using the average foreign currency exchange rates for the current period (quarter-to-date or year-to-date) and applied to each of the comparable periods. What this does is removes the effect of currency movements. While the constant currency number is useful for comparative purposes it is essentially fictitious and won’t appear again. The bottom line is the 2 per cent dip to $S881 million.

The Singapore consumer business and regional mobile associates, namely Airtel and Globe, contributed strong growth. The Group’s share of the regional mobile associates’ pre-tax earnings grew 8 per cent to $S594 million. (In constant currency terms, this would have increased 20 per cent).

Airtel delivered a sharply improved quarter with strong growth in voice and data, and higher margins in India. The Group’s share of Airtel’s pre-tax earnings grew 68 per cent. In the Philippines, Globe’s pre-tax earnings contribution was up 20 per cent.

The Group and its regional mobile associates also recorded strong customer growth in the quarter. As of June 30, 2014, the combined mobile customer base [the total number of mobile customers in SingTel, Optus and the regional mobile associates] grew 10 per cent to 525 million from a year ago.

SingTel Group CEO, Ms Chua Sock Koong, said, “This quarter, the Group reported strong operating results and increased free cash flow. Our regional mobile associates delivered a solid performance. Their markets are experiencing strong growth, spurred by improvements in 3G networks, handsets and content. We are collaborating with our associates to accelerate investments in networks, and launch new data and digital services.

Read more: Optus grows EBITDA, underlying net profit in Q1 2014/15, but operating revenue drops

“In Singapore and Australia, tiered data plans are gaining traction with customers and driving mobile data usage. At Optus, we saw encouraging sales momentum from the recently launched MyPlan Plus with customer take-up of both SIM-only and data share plans. In Singapore, we introduced the world’s first 300 Mbps 4G service and the island’s first voice over LTE service,” Ms Chua said.

“In the digital space, Amobee acquired Adconion, a cross channel digital advertising company with market presence in the US and Australia, and Kontera, a digital content analytics platform. With Kontera’s unique technology and Adconion’s relationships with major advertisers, these investments will differentiate and strengthen Amobee’s position.”

The company noted that the Australian Dollar and regional currencies weakened significantly against the Singapore Dollar, with the Australian Dollar and Indonesian Rupiah declining 5 per cent and 19 per cent, respectively, from a year ago. However, from a quarter ago, currency movements had stabilised.

The Singapore operations continued to grow its consumer home and mobile businesses. In Australia, mobile service revenue was stable, reflecting Optus’ strategy to drive data revenue growth.

Free cash flow generated in the first quarter was up 33 per cent to $S1.18 billion on strong operating cash flow from Singapore and Australia.

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