Singapore Telcos Lower Outlook as the Fourth Telco Looms

And then, there were two.

Originally, there were three parties vying to be Singapore’s fourth telco, namely MyRepublic, TPG Telecom and airYotta. Last Wednesday, airYotta had to drop out from the race as it did not meet the criteria of Infocomm Media Development Authority’s (IMDA). This leaves MyRepublic and TPG Telecom in the hunt.

However, Singapore’s incumbent telcos have been lowering its business outlook even before the fourth telco hits the Garden City’s shores.

Going down

In StarHub Ltd’s (SGX: CC3) second quarter, the telco signaled that its service revenue will be unchanged for the year. This was a change from its previous outlook where StarHub had called for a low single digit increase in service revenue for the current year.

Unfortunately, StarHub’s third quarter didn’t provide any comfort.

Service revenue fell 2.2% year on year, dragged down by lower sales from its Mobile services, Pay TV services and Enterprise services. 

Double down

Fellow telco M1 Ltd (SGX: B2F) has also reduced its net profit (after tax) guidance twice this year.

In the first quarter, M1 had guided towards a stable performance for 2016’s net profit (after tax). But in the second quarter, the guidance was revised to a single digit decline. Back then, M1’s Chief marketing officer Poopalasingam Subramaniam said that guidance was down due to a move to invest in digital solutions.

Then, came another outlook update in the third quarter.

After reporting a decline in service revenue, M1 said that its net profit will be down, following its year-to-date range. Given that its net profit was down around 12.6% in the first nine months of the year, it suggests that M1’s net profit could be down double digits this year.  

Third time’s a charm

The biggest of the trio, Singapore Telecommunications Limited (SGX: Z74) was not spared either.

Singtel, as the telco is better known, also decided to lower its guidance after a tougher first half of its fiscal year. In its latest quarter, Singtel recorded a 2.3% revenue decline. However, in contrast to M1 and StarHub, Singtel’s decline was driven by lower mobile termination rates (MTR) in Australia. The telco said that its revenue would have been up 2% without the effects of the MTR.

In any case, Singtel expects its revenue to decline in the single digit range despite a single-digit increase guidance prior to the latest quarter.

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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.