Singapore Telecommunications Ltd forecast its first drop in
annual revenue in 14 years after it posted a weaker-than-expected
quarterly profit, hit by tough competition in its key Australian market.
Southeast Asia's largest telecommunications firm by market value,
relies on Australian unit Optus for two-thirds of its revenue, but
competition with the likes of Telstra has grown increasingly fierce amid slowing growth in that country's mobile market.
said on Wednesday that it now expects a "mid-single digit" percentage
decline in Australian operating revenue for the financial year ending
March 2013, a reversal from its earlier forecast for a low-single-digit
"With the revised revenue outlook for Australia, the
consolidated revenue of the group is expected to decline by a low-single
digit level," SingTel said in a statement. SingTel last reported a fall
in annual revenue in 1998/99, Thomson Reuters data shows.
however, expects earnings before interest, tax, depreciation and
amortisation (EBITDA) at the group level to be stable, in line with
For its July-September quarter, SingTel, which
also owns large stakes in several mobile operators including India's
Bharti Airtel and Indonesia's Telkomsel , had an
underlying net profit of S$886 million. That was up only slightly from
S$885 million a year earlier and undershot the S$896 million average
estimate of six analysts polled by Reuters.
main issue is with Australia. It's really in the pricing, on bundles
offered on fixed line products that is impacting top-line revenue," said
Michael Wu, an equities analyst with Morningstar in Sydney.
were expecting EBITDA to decline ... but they did match their declining
revenue with declining costs, so EBITDA is stable. That's encouraging,"
Nomura Securities said revenue and operational trends at
Optus were weak, noting Telstra had gained market share in Australia's
mobile market after discounting the gains in subscriber numbers
following Optus's purchase of Vivid Wireless earlier this year.
Australia's No.2 telecom after Telstra, saw revenue drop 4 percent to
A$2.24 billion during the quarter from a year earlier, due to price
competition in mobile phones and a mandated reduction in mobile
SingTel shares have risen about 2 percent this
year, underperforming a 13 percent gain in the broader Straits Times
Index. The stock was down 0.6 percent at 0452 GMT, in line with the
decline in the broader index.
better in its home market, where revenue rose 4 percent from a year
earlier to S$1.67 billion during the quarter, helped by a strong
performance from IT and engineering arm NCS. In mobile phones, SingTel's
share of the local market rose by 0.2 percentage point from the
previous quarter to 46.6 percent.
Even so, SingTel's postpaid
average revenue per mobile phone user fell about 6 percent to S$80
during the quarter as roaming income declined amid the growing
popularity of cheaper Internet data and voice services such as WhatsApp
SingTel's results were also hurt by the strength of the
Singapore dollar, which depressed contributions from India, Indonesia
The Singapore dollar has gained 6 percent against
the U.S. dollar so far this year, the second-best performing Asian
currency after the Philippine peso among 10 currencies tracked by
Telkomsel, for instance, had a pretax profit increase of
26 percent in local currency terms, but this translated into a smaller
rise of 16 percent when converted in Singapore dollars.
currency movements, SingTel's underlying net profit, which excludes
one-off items, would have risen 2.9 percent year-on-year.
pretax earnings from SingTel's regional mobile associates grew 17
percent to S$549 million, with strong performances from Telkomsel and
Thailand's Advanced Info Service PCL helping to offset weaker results from Bharti.
consolidated revenue does not include contributions from Telkomsel, in
which it has an effective stake of about 35 percent, and other regional
mobile operators because it owns less than 50 percent of these firms.
which is around one-third owned by SingTel, last week reported its 11th
consecutive quarter of profit declines, with margins under pressure
from intense competition.
© Thomson Reuters 2012