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Singtel fiscal Q4 profit down 19% YOY on forex, lower associate contributions

Singtel's net profit for the fourth quarter that ended March 31 fell 19% to S$781 million, down from S$963 million a year ago, due to weaker results from its regional associates, adverse currency movements and lower National Broadband Network revenue.

The government-owned telecom operator, the largest in Singapore with a 48.6% market share in mobile subscriptions, reported revenue of S$4.33 billion, a 0.4% year-over-year increase.

EPS attributable to shareholders was 4.78 Singapore cents, compared with 5.90 cents a year earlier.

The pretax contributions from Singtel's regional associates — Bharti Airtel Ltd. in India, Telkomsel in Indonesia, Advanced Info Service Public Co. Ltd. in Thailand and Globe Telecom in the Philippines — fell 24.9% to S$488 million, down from S$651 million a year ago.

Singtel said Airtel's results were impacted by intense competition as a new player led an aggressive pricing campaign and was worsened by mandated cuts in mobile termination rates in India. Meanwhile, Telkomsel's earnings were affected by a decline in legacy services and heightened price competition.

The silver lining for Singtel was the increased profit contribution from Advanced Info Service, which the company attributes to revenue improvement and cost management. Globe Telecom also delivered strong earnings from rising data revenue and cost control.

In Singapore, Singtel's mobile communications revenue declined 5.7% year over year to S$302 million, on the back of voice to data substitution, declines in roaming services and a higher mix of SIM-only plans. Mobile subscribers fell 1.3% year over year to 4.09 million, while blended ARPU was down 4.3% to S$44.

Australian earnings

In Australia, Singtel Optus Pty. Ltd.'s operating revenue rose 3% to A$2.17 billion due to strong customer growth, higher equipment sales and increased ICT and managed services revenue. Mobile subscriber base grew 3.9% over the fiscal year at 10.1 million. Currently, Optus has 6.33 million 4G mobile customers and a 4G mobile network that reaches 96.9% of the Australian population.

Revenue from the company's consumer business fell 1.8% to S$2.41 billion due to a weaker Australian dollar, which depreciated 4% year over year against the Singapore dollar. Profit from Singtel's enterprise business was stable at S$1.71 billion, with the growth in ICT revenue offsetting the declines in traditional carriage services.

Meanwhile, revenue from Singtel's digital life business, which is focused on internet technology, surged 62% to S$205 million, lifted by one-off content cost credits and government grants.

Fiscal full-year net profit rose 41.5% to S$5.45 billion, a record for Singtel, which it said was driven by gains from the divestment of fiber-optic provider NetLink Trust and a strong performance by its core business. Operating revenue grew 4.9% to S$17.53 billion, up from S$16.71 billion a year ago. EPS attributable to shareholders was 33.4 Singapore cents, compared to 23.96 cents a year earlier.

Group CEO Chua Sock Koong said the results reflect Singtel's "strong execution" of its digital transformation strategy in its core and new digital businesses. Singtel plans to collaborate more with its regional associates to find new areas of growth.

Revenue is expected to increase slightly and EBITDA will be stable for the financial year ending March 2019. CapEx is expected to reach S$2.2 billion, comprising A$1.4 billion for Optus and S$800 million for the rest of Singtel Group. Barring unforeseen circumstances, the company expects to maintain its ordinary dividend at 17.5 Singapore cents per share for the next two financial years.

As of May 17, US$1 was equivalent to S$1.34.