The Different ways Singapore Telecommunications Limited Makes Its Money

Singapore Telecommunications Limited (SGX: Z74) is the largest telecommunications company in Singapore. But that’s not all – its presence actually stretches across the Asia Pacific region and even into Africa. All told, it currently has over 610 million mobile customers in 24 countries.

Given the wide reach of Singtel’s business, it may be useful to have a look at the company’s revenue and profit sources.

Singtel has three main business segments: Group Consumer, Group Enterprise, and Group Digital Life. Here’s a table showing each segment’s revenue and EBITDA (earnings before interest, taxes, depreciation, and amortisation) in the fiscal year ended 31 March 2016 (FY2016):

Source: Singtel FY2016 annual report

Group Consumer is the biggest of the three, making up 60% of Singtel’s total revenue in 2016. This segment comprises the consumer businesses across Singapore and Australia. The services provided here include mobile, pay TV, fixed broadband and voice, as well as equipment sales.

The segment also includes Singtel’s investments in its regional mobile associates, such as AIS in Thailand, Globe in the Philippines, Telkomsel in Indonesia, and Airtel in India, Africa, and South Asia. These associates are what gives Singtel its wide geographical reach.

But, it’s worth noting that the EBITDA numbers in the table above do not contain the results from the associates. The associates also do not contribute any revenue to Singtel. Singtel’s share of the associates’ profits will be seen later.

For now, we turn to the Group Enterprise segment. It is the second largest revenue contributor to Singtel at 37.7%.

Group Enterprise’s focus is on growing Singtel’s presence in the enterprise market. Key services include mobile, equipment sales, cloud computing, cyber security, and more. The segment’s geographical markets are Singapore and the region, Australia, the US, and Europe.

Group Digital Life is the last business segment of Singtel and it is the smallest, with a revenue share of just 2.7% in FY2016. This is the segment in which Singtel focuses on digital marketing, over-the-top video streaming, and advanced analytics and intelligence services. The companies in these ventures are, respectively, Amobee, HOOQ, and DataSpark.

In the table below, you can see Singtel’s share of the pre-tax results of its associates in FY2016:

Source: Singtel FY2016 annual report

Singtel’s total EBITDA and share of pre-tax results of associates and joint ventures in FY2016 came up to S$7.80 billion. So, as you can tell, the associates take up a significant chunk of the telco’s results.

From all the above, we can draw a few observations.

First, Singtel is a geographically diverse business.

Second, a significant amount of the company’s bottom-line comes from associates and joint ventures which Singtel does not have majority control over.

There are clearly a lot of moving parts when it comes to Singtel’s business and investors who can break down the company’s revenue and profit sources will be able to make more informed investment decisions.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.