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Telecommunication

Singtel profit falls pressured by Australian business

Roaming revenue hurt by travel curbs due to coronavirus spread

Singtel's net profit for the three months ended December fell 24% to 627 million Singapore dollars.   © Reuters

SINGAPORE (Nikkei Markets) -- Singapore Telecommunications posted a drop in third-quarter earnings and said it is taking a hit from lower roaming revenues as overseas travel declines due to the outbreak of the novel coronavirus in China and the region.

However, the Australian enterprise business, which serves governments and companies, was the biggest drag in the last quarter. Singtel has cut prices in that country to maintain market share as demand for voice and other traditional telecommunication services continues to fall.

Singtel owns Optus in Australia and has large stakes in regional mobile phone operators such as India's Bharti Airtel, Indonesia's Telkomsel, Thailand's Advanced Info Service and Globe Telecom in the Philippines.

While contributions from its regional mobile phone associates recovered in the quarter ended December, the increase was offset by weaker earnings from the enterprise business as well as lower one-time gains.

The company's net profit for the three months ended December fell 24% to 627 million Singapore dollars ($452 million).

Still, the results were better than the consensus forecast of around S$570 million and marked a turnaround from the April to June period, when Singtel posted its first-ever quarterly loss of S$668 million due to provisions related to Airtel.

Excluding one-off items, Singtel's underlying net profit fell 19% to S$551 million from S$680 million in the year-ago period.

Speaking to reporters via a conference call, group CEO Chua Sock Koong said roaming traffic has fallen as fewer Singaporeans travel abroad and visitors to the city-state decline due to travel restrictions imposed by governments to contain the Covid-19 virus, which has killed more than 1,300 people in China.

Looking ahead, Singtel said its operations would continue to face intense competition and carriage declines amid weak business and consumer sentiment.

The company cut its earnings outlook for the current financial year ending March but said it would maintain its dividend for the year.

As with its peers in other countries, Singtel's challenges have mounted as customers switch from voice and text messaging to lower-cost data-based services.

In a bid to offset the impact, the company has been diversifying into areas such as data security and internet advertising. Singtel has also applied for a digital banking license in the city-state in partnership with ride-hailing company Grab, and plans to submit its proposal for a standalone 5G mobile network in Singapore later this month.

Turning to its associates, Singtel said it was "cautiously optimistic" about Airtel, which has weighed on earnings in recent years.

The Indian mobile operator recently posted a third straight quarterly loss due to fierce competition and the need to make billions of dollars in spectrum fee payments to the Indian government.

Arthur Lang, Singtel's CEO International, said Bharti had a strong quarter operationally due to industry-wide price increases in India, while its balance sheet has strengthened following a $3 billion fund raising via a share and convertible bond issue that was strongly oversubscribed.

--Kevin Lim

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