Singtel full-year profit tumbles 44% on lower contributions from regional associates and lack of one-time gain

15 May 2019

Singtel Group has published its financial results for the year ended 31 March 2019, with operating revenue stable at SGD17.37 billion (USD12.69 billion), up 4% in constant currency terms, although net profit slumped 44% year-on-year to SGD3.10 billion from SGD5.47 billion due to lower associates’ contributions, and the lack of last year’s SGD2.3 billion gain from the divestment of a 75% stake in NetLink Trust. Consolidated EBITDA of SGD4.69 billion marked a 7% year-on-year decline, while underlying net profit (which strips out exceptional items) plunged 21% to SGD2.83 billion from SGD3.59 billion. Free cash flow grew 1.2% y-o-y on lower capital expenditure (SGD1.74 billion), partially offset by lower operating cash, it said. As at 31 March 2019, the carrier reported that the aggregate number of mobile subscribers across the group (excluding Airtel) stood at 308.099 million, down from 310.256 million y-o-y, while on a proportionate share basis, the figure stood at 126.007 million, from 124.210 million.

Singtel’s outlook for the year ending 31 March 2020 will focus on creating ‘sustainable shareholder value through strategic transformation of its core business and growth in its global digital businesses’. Further, Singtel Group says it will ‘continue to invest in networks, spectrum, technology and content to create sustainable competitive advantages. In Australia, Optus gained market share in mobile and is set to enhance its market position through network and product differentiation, including the recent introduction of 5G fixed-wireless services. In Singapore, the Group will consolidate its leadership position through continued innovation in product, content and services. The Group continues to drive digitalisation and automation to improve customer experience and achieve a leaner cost structure. For FY2020, the Group expects these initiatives to deliver cost savings and avoidance of around SGD490 million.’ Consolidated revenue for the Group is expected to grow by ‘mid-single digit’ range, and consolidated EBITDA to be stable.

The Group’s performance is one of its weakest for more than a decade, however, and highlights the challenges faced by Southeast Asia’s largest telecoms carrier as rivals strike deals in a highly competitive industry. Not only is growth hampered in Singapore by the city-state’s relatively small size and a crowded marketplace, but its regional associates have also experienced intense competition in recent years, all of which is capping Singtel’s profitability. Industry analysts point out that the group is facing pressure from within to trim its cost base and find new revenue streams.