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5 Quick Things Investors Should Learn About Singapore Telecommunications Limited

Singapore Telecommunications Limited (SGX: Z74) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations and conference calls.

There may be useful and important information that investors can learn from the webcasts and transcripts.

A few weeks ago, Singapore Telecommunications, which is better known as Singtel, had released its results for the quarter and fiscal year ended 31 March 2016 (FY2016). I had spent time listening to Singtel’s earnings presentation and analyst conference call and came away with five things that may be important for investors to note.

But before I share them, here’s a quick background on Singtel for some context later. The company is the largest player among the trio of telecommunications services providers in Singapore (the other two are M1 Ltd (SGX:B2F) and StarHub Ltd (SGX:CC3)). Singtel has three major business segments: Group Consumer, Group Enterprise, and Group Digital Life.

With that, here are my notes:

  1. Chua Sock Koong, Singtel’s Group chief executive, kicked of the earnings briefing with an overview of the company’s performance. She said that the year’s good performance was reflective of Singtel’s resilient core business as well as higher contributions from its associates. Chua also said that the results were achieved against a backdrop of a slower economy and weaker currencies.
  2. Singtel’s fourth-quarter revenue fell by 6% year-on-year due to deep cuts in Australian mobile termination rates. For the reporting quarter, net profit was stable, but was up 4% on a constant currency basis.
  3. Chua also discussed the opportunities Singtel sees in the Australian market. She said that Australia is the second largest Asian telecommunications market outside of Japan. Chua acknowledged that there is currency exposure to manage. But she also said that Singtel’s Australian investments were made by looking at the expected returns in the context of the risks taken.
  4. Singtel’s chief executive for Group Digital Life, Samba Natarajan, also discussed the future of the segment. He said that Singtel will be looking for the Digital Life companies to be “sizable businesses” in the future. The different businesses are at different stages at the moment. Natarajan cited the examples of Amobee and HOOQ; the former has been in existence for five plus years while the latter came into being only around a year ago. In his view, HOOQ is still very much in the early stages. Natarajan added that Amobee will be committing a significant portion of its resources to other Singtel entities in the current fiscal year. Singtel is hoping to leverage Amobee’s analytical insights to better serve customers.
  5. Bill Chang, Singtel’s chief executive for Group Enterprise, said that the cyber-security business is currently a growth business. Investors may remember that Singtel splashed out US$770 million in 2015 for Trustwave, a US-based cyber security firm. Chang said that he expects the combined enterprise business, including Trustwave, to have growth rates in the mid-teens when it reaches steady state.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.