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7 Must-Read Quotes For Investors From Singapore Telecommunications Limited’s Management

Singapore Telecommunications Limited  (SGX: Z74) is one of the largest telecommunications companies in Asia and it has operations mainly in Singapore and Australia. It divides its business into three major divisions, namely, Consumer, Enterprise and Digital Life.

The company  reported its fiscal first-quarter earnings recently on 11 August 2016. You might not want to miss these seven quotes from Singtel’s management from the earnings call.

On the decline in traditional mobile revenue

During the reporting quarter, Singtel’s Group Consumer division revenue fell by 16% year-on-year. On the Singapore consumer side, revenue declined by 9%. In the earnings call, Yuen Kuan Moon, Singtel’s Chief Executive Officer for Consumer Singapore, acknowledged that mobile voice roaming revenue has declined:

“I think the stable mobile revenue you see is primarily due to a decline in voice roaming revenue.”

For context, Yuen said that voice roaming was 21% of Singapore’s mobile revenue:

“For this quarter, our mobile roaming revenue as a total of mobile revenue is about 21%, comparing to last year it is 22% and I think we will continue to see this percentage being reduced going into the future because we expect people to switch from voice roaming to data roaming.”

On the rise of data roaming

But that’s not all. Data roaming is on the rise. In fact, Yuen said that data roaming might fully replace voice roaming revenue in the future:

“So we believe that over time, as we start to grow the data roaming revenue, you will come to a point when we can replace the voice roaming revenue. So we are confident that data will continue to be the main core growth driver for mobile business for Singtel.”

Singtel’s Group CEO Chua Sock Koong also said during the call that mobile data revenue is a “key growth driver” across Singtel’s operations.

On mobile data growth at associates

Telkomsel is one of Singtel’s regional mobile associates. Chua said the following about Telkomsel’s growth:

“Telkomsel has been making significant investments in network and investments in data analytics that allowed them to do very targeted segment pricing. With the increased penetration of smartphones, what we have seen is actually growth in mobile data and that has contributed very nicely to the profit growth in Telkomsel.”

On moving to the cloud

Here is Bill Chang, CEO for the Group Enterprise division, responding to a question on Singtel’s G-cloud platform and its scope:

“This is really the platform that we built for the government – Singapore’s government – where they host a lot of applications, government related e-services, with different levels of sensitivity. All hosted on a platform that we provided for them as a service- compute and storage. This is a contract that is running for the last few years and it is scaling up.

This is just one portfolio of our overall cloud service offerings.”

On Optus gaining ground on its competitor

Optus is Singtel’s Australian subsidiary. Consumer Australia’s CEO Allan Lew had this to say about Optus’s performance in the reporting quarter in the mobile sector:

“I think when we look at mobile, and particularly the higher-end branded handset customers, we look at what we reported for the equivalent period over six months.

Our reported net adds are significantly higher than Telstra’s…

… [W]e are gaining customers at the expense of our largest competitor, and a lot of that is due to our aggressive market offers that we have out there and the improvement in coverage that we have, and quality of our mobile network.”

Telstra, in this case, is Australia’s largest telco. Optus is in second place.

On the lack of profit at the Digital Life division

Samba Natarajan is the CEO for the Group Digital Life division. This is his response to a question about the division’s narrowing losses:

“We have had a very good quarter in terms of revenue growth this last quarter, and we project that EBITDA [earnings before interest, taxes, depreciation and amortization] losses will also continue to narrow. We continue to guide GDL [Group Digital Life] for a range of S$150 million to S$180 million in EBITDA losses for this fiscal year.

As for when we will monetize it, I think we are constantly evaluating that, and we will continue to build more scale and at the point we are ready we will come back with a plan on that topic.”

Group Digital Life remains a small sliver of Singtel’s sales.

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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.