SINGAPORE (May 18): Singtel reported FY17 core earnings of $3.9 billion this morning, coming in line with management guidance and meeting 100% consensus estimates.
(See also: Singtel posts 2% rise in 4Q earnings to $963 mil; NetLink Trust IPO making 'good progress')
What made the news though was weaker associate performance although this was offset by growth in mobile data, ICT and digital revenues.
Associate contributions fell 3% y-o-y in 4Q17, led by the sharp decline at Airtel from aggressive price-led competition following the entry of Reliance Jio. The impact was partially mitigated by a 18% growth from Telkomsel. Excluding Airtel, associate contributions would have been 13% higher for the quarter.
For 4Q17 ended March, core earnings came in flat at $988 million on the back of a 5.2% rise in operating revenue to $4.3 billion.
This was partly driven by the 6% appreciation of the AUD/SGD. On a constant currency basis however, revenue growth would have been 2.1% and EBITDA stable.
Singapore mobile service dipped 3% q-o-q on seasonality, consistent with its peers on roaming/usage weakness.
Postpaid additions hit a record 42,000 during the quarter due to promotions, although ARPU slipped to $67 with higher take-up of SIM-only plans. Mobile revenue from Optus was flattish q-o-q while ARPUs were stable.
EBITDA losses for Group Digital Life (GDL) narrowed to $122 million in FY17 against robust 19% revenue increase as Amobee scales up further.
Management guidance for FY18 is for consolidated revenue to grow by mid-single digits with EBITDA growth at a low-single digit.
Mobile service revenue for Optus is expected to grow by low-single digits, while that of Singapore mobile service revenue is set to decline by low-single digits. GDL revenue is guided at $1.2-1.3 billion, with EBITDA losses narrowing further to $100 million from $122 million loss a year ago.
“No change to our forecast, ‘neutral’ rating and SOP-based $4.00 target price pending the results call,” says RHB in a report this morning. “The stock remains our preferred exposure to the Singapore telcos under our coverage as it is the least susceptible to the threat posed by TPG Telecom, the fourth entrant with a 70MHz of low and high band spectrum secured at the recent 4G auctions.”
“We look forward to some clarity with regards to its plan to list NetLink Trust (NLT) to unlock the value of the asset,” says RHB as Singtel is required to pare down its stake in NLT to less than 25% by next April.
As at 11.51am, shares of Singtel are down 1 cent at $3.74.
