May 18, 2017 8:13 pm JST

Singtel Q4 net profit edges up 1.8%, contributions from India's Bharti tumble

Company expects "mid-single digit" revenue growth for the full year

SINGAPORE (Nikkei Markets) -- Singapore Telecommunications posted a 1.8% rise in fiscal fourth-quarter net profit as improvements in some parts of its Asian operations managed to offset a steep fall in contributions from India's Bharti Airtel.

Singtel's broadband services in Australia grew and its Indonesian associate Telkomsel contributed 17% more in earnings lifting net profit for the three months ended March to 963 million Singapore dollars ($692 million) from S$946 million in the same period a year ago. Underlying net profit, which excludes one-time items, rose 0.8% to S$988 million.

For the full year, Singtel's net profit was barely changed at S$3.85 billion compared with S$3.87 billion in the previous year, while group revenue fell 1.5% to S$16.7 billion due to the decline in Australian mobile termination rates.

Looking ahead, Singtel, Singapore's largest company by market capitalization, said it expects consolidated revenue to grow by mid-single digits in the current financial year ending March 2018, with earnings before interest, tax, depreciation and amortization, or EBITDA, rising by low-single digits.

RHB Research said Thursday's results were in line with expectations and that the highlight was the weak showing by Bharti Airtel, which offset the growth in mobile data, information and communication technology services and digital revenues. Singtel's effective stake in the Indian company is around 36%. Its contributions for the quarter plunged 51% due to brutal competition in India.

Speaking at a media briefing, Singtel group CEO Chua Sock Koong said Bharti Airtel's earnings were adversely affected by newcomer Reliance Jio's offer of free voice and data services to gain market share in India.

"Jio has started charging from April, so Airtel would be in a position to take on competition in a more regular fashion," she said without providing more specific guidance.

Besides Bharti Airtel and Telkomsel, Singtel also has stakes in the Philippines' Globe Telecom and Thailand's Advanced Info Service.

Like many peers in the telecom industry, Singtel has been hit by lower income from international calls and roaming as customers switch to internet-based telephony or communicate through messaging applications. To address the drop in revenue, the Singapore company has branched into new areas such as digital content and cyber security.

Singtel said mobile service revenue from its Australian subsidiary Optus is projected to grow by low single digits in the year ending March 2018, while mobile communications revenue from Singapore would probably decline by low single digits due to increased competition as well as declining voice traffic.

Responding to queries from reporters, Chua highlighted cyber security and digital advertising as promising growth areas for the company.

According to Singtel, operating revenue from cyber security rose 84% to S$473 million in the just-ended financial year from S$258 million the year before.

Amobee, its loss-making digital advertising technology unit, saw operating revenue rise 20% to S$602 million for the year. Singtel expects Amobee to break even in the current financial year on an EBITDA basis, with revenue contribution to Singtel growing between S$1.2 billion and S$1.3 billion. Amobee completed its acquisition of Turn Inc., another digital advertising technology firm, in April this year.

Group Digital Life, which manages many of Singtel's digital investments, will remain in the red, however, with a loss before interest, tax, depreciation and amortization of around S$100 million. This is due to higher content and marketing costs at HOOQ, a regional video on demand streaming service which is a joint-venture between Sony Pictures Entertainment, Warner Bros and Singtel.

Singtel declined to discuss HOOQ's finances, but said the service was gaining traction in regional markets and Singapore.

Chua also said that Singtel is on track to reduce its stake in NetLink Trust - which owns and operates Singapore's passive fiber network infrastructure - to less than 25% before April 2018. This will be done through an initial public offering and is in line with Singtel's undertaking to the Infocomm Media Development Authority.

--Kevin Lim

--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

Asia300

Singapore Telecommunications Ltd.

Singapore

Market(Ticker): SES(Z74)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 44,637.38M
Shares: 16,329.15M
Asia300

Bharti Airtel Ltd.

India

Market(Ticker): BOM(532454)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 22,673.20M
Shares: 3,997.4M

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