Singtel stumbles into SGD668m Q2 loss on Bharti Airtel provision

15 Nov 2019

Singapore-based Singtel Group booked a net loss of SGD668 million (USD490.2 million) for its fiscal second quarter ended 30 September 2019, reversing a profit of SGD667 million in the corresponding period of 2018, as it was forced to absorb an exceptional provision of SGD5.49 billion relating to regional associate, India’s Bharti Airtel. Local press noted that mainboard-listed Singtel posted a ‘historic first quarterly loss’ following what group CEO Chua Sock Koong termed ‘an unprecedented, surprise announcement from the Supreme Court’ in India last month that ordered telecom operators to pay the state billions in historical fees. Excluding the impact of Bharti Airtel, Singtel says it would have realised a 4% annualised increase in net income for the three months under review, although it noted that quarterly revenues dipped 2.8% year-on-year to SGD4.152 billion from SGD4.270 billion. The fall in turnover was attributed to a weak performance for its Enterprise segment, especially for Singtel Optus in Australia.

Group EBITDA, meanwhile, rose 6.5% to SGD1.162 billion as the EBITDA margin improved 1.6pp to 28.0% and operating income (EBIT) climbed 5.2% to SGD963 million from SGD905 million. Looking at the full year, Singtel has indicated that consolidated revenue and EBITDA – excluding national broadband network (NBN) migration revenues in Australia – are expected to be stable y-o-y, marking a downgrade from last quarter when the group issued guidance revenue growth in the mid-single digit range and EBITDA growth in the ‘high single digits’. Commenting on the revision, CFO Lim Cheng Cheng highlighted ‘the challenge that we face in Australia from the enterprise business, so that was a substantial downdraught for the group enterprise numbers’, as well as the aforementioned NBN migration. Nonetheless, even with the recent impact of its Bharti Airtel provision, Ms Chua bullishly stated that Singtel expects to book a profit for the full year, adding that CAPEX for the year will reach up to SGD2.1 billion to underpin investment in its core networks and to prepare for the upcoming rollout of 5G mobile technology. With domestic operators required to submit proposals for either one of two nationwide and/or two smaller-scale 5G licences by January 2020, the CEO said that Singtel ‘would have to go for a nationwide licence, although I’m stating that before we’re submitting our final proposal’.

Singapore, Singtel, Singtel Group