March Quarter Earnings of Singapore's Three Telecoms Operators
OREANDA-NEWS. For the three months ended 31 March 2016, Singapore’s largest telecoms operator Singapore Telecommunications Ltd registered flat year-on-year growth in net profit, while second-ranked StarHub Ltd saw a 25.9% year-on-year jump. M1, the smallest telco in the city-state, posted a 6.9% YoY decline in earnings.
Singapore’s three telcos have a combined market capitalisation of about S$70 billion, with Singtel and StarHub both constituent stocks in the Straits Times Index. These three stocks averaged a year-to-date and five-year total return of minus 2.8% and 51.2% respectively. They also maintain an average dividend yield of 5.6%.
Singtel’s fourth-quarter net profit of S$946 million was up 0.8% from S$939 million in the year-ago period, while revenue fell 5.6% YoY to S$4.09 billion. For the full year, it clocked earnings of S$3.9 billion, up 2.4% YoY, on the back of a 1.5% dip in revenue to S$17.0 billion.
Foreign currency movements against the Singapore dollar affected fourth-quarter earnings by 3% or S$27 million, Singtel said in its 12 May results statement.
Mobile data was a key contributor to growth, particularly among the regional mobile associates, together with cloud and cyber security services, it said.
Excluding the impact from a newly acquired cyber security business and foreign exchange, Singtel’s underlying net profit – defined as earnings before exceptional items – for the quarter grew 8%.
Operating revenue for the quarter fell 5.6% due to reduced mobile termination rates in Australia and lower handset sales in Singapore. In constant currency terms, it would have slipped 3.1%.
Regional mobile associates’ pretax contributions for the quarter rose 12% and 16% in reported and constant currency terms respectively. The associates’ strong performance was driven largely by increased contributions from Telkomsel, with Indonesia’s leading cellular operator gaining revenue share following a significant increase in its 3G and 4G subscribers.
StarHub posted a net profit of S$92.8 million for the quarter, versus S$73.7 million in the year-ago period. EBITDA jumped 13.2% YoY to S$183.4 million, while revenue slid 4.4% YoY to S$590.9 million, largely due to lower sales of equipment, it said in its 5 May results statement.
For the quarter, StarHub grew its customer base for both pre- and post-paid Mobile, as well as revenues for its Broadband and Enterprise Fixed services. Mobile continued to be the major contributor, with 50% share.
Its free cash flow for the quarter also improved significantly to S$90 million, compared with negative S$46 million in the year-ago period.
M1 posted a net profit of S$42.5 million versus S$45.7 million for the quarter, hit mostly by higher upfront customer acquisition costs, while revenue fell 12.6% YoY to S$257.6 million.
Service revenue remained stable YoY at S$203.4 million, while free cash flow increased 90.8% YoY to S$64.1 million, the telco said in its 13 April results statement.