SINGAPORE (May 18): Singapore Telecommunications is feeling the heat from rising competition in the telecoms market.
The country’s largest telco reported a 2% rise in earnings for 4Q17 ended March, to $963 million. Operating revenue grew 5% to $4.3 billion.
But pre-tax earnings from its regional associates fell 6% in the quarter, to $658 million. The decline was mainly driven by India-listed associate Bharti Airtel, in which Singtel has a 36.5% stake.
Airtel has operations in 17 countries across Asia and Africa. Although the company’s operating performance in Africa improved, its Indian operations have been impacted by the entry of a new operator in India that has sparked a price war by offering free voice and data. As a result, Airtel’s pre-tax earnings contributions to Singtel fell 51% to $91 million.
Excluding Airtel, pre-tax earnings from Singtel’s regional associates increased 10% to $568 million. This was driven mainly by robust growth in the Indonesian market for voice, data and digital services. Singtel owns 35% of Indonesian mobile network operator (MNO) Telkomsel.
Singtel had managed to outperform its peers for most of this year as investors expected it to be the least impacted by the entry of a fourth MNO here next year. Singtel derives most of its earnings from outside Singapore.
In recent weeks, however, peer M1 has been closing the gap. Shares of M1 are up 18.6% this year, versus a 2.5% increase in the shares of Singtel.
In Singapore, Singtel’s consumer business continues to hold up. Revenue rose 1% y-o-y to $589 million.
However, the group’s mobile business reported a fall in revenue – from $520 million in 4QFY2016 to $511 million in 4Q17.
Yuen Kuan Moon, CEO of Singtel’s Singapore consumer business, says the decline in voice usage has accelerated. Singtel has expanded services such as ReadyRoam in order to encourage greater usage of data. A data roaming plan, ReadyRoam now allows consumers to access data across multiple overseas destinations at discounted prices.
