Singapore Telecommunications Limited’s Latest Earnings: 3 Things Investors Should Know About Its Group Consumer Business

Singapore Telecommunications Limited (SGX: Z74) is Singapore’s largest operational telco, and it currently has three business segments: Group Consumer, Group Enterprise, and Group Digital Life.

In mid-August, Singtel reported its first quarter results for its fiscal year ending 31 March 2018 (FY2018). The reporting quarter was from 1 April 2017 to 30 June 2017. Since Singtel has three different business segments, I thought it would be useful to have a look at the performance of the individual segments.

Here are three important things investors may want to know about the Group Consumer segment’s latest performance:

1. The overall result

The table below shows the operating revenue, EBITDA (earnings before interest, taxes, depreciation, and amortisation), and EBIT for the segment in the first quarters of FY2018 and FY2017:

Source: Singtel FY2018 first quarter earnings announcement

During the reporting quarter, revenue was up 7.5% compared to a year ago. But, EBIT barely grew, as operating expenses increased faster than revenue.

2. Performance of the Singapore business

The Group Consumer segment can be broken down into a few other sub-segments. One of them is Singapore Consumer .The following table shows the performance of the Singapore Consumer sub-segment in the reporting quarter:

Source: Singtel FY2018 first quarter earnings announcement

Revenue for the quarter grew by 1.6% due to growth in handset sales and consumer home services. Mobile revenue was marginally lower (a 1% decline) with growth in data offsetting the continued decline in local and roaming voice revenues.

Despite the sub-segment’s higher revenue, EBITDA and EBIT margins were both down, mainly due to higher costs for handsets, and higher staff expenses.

3. Performance of the Australia business

Another sub-segment within Group Consumer is Australia Consumer. This comes mainly from Singtel’s full ownership of Australian telco, Optus. The table below shows the revenue, EBITDA, and EBIT of the Australia Consumer sub-segment in the first quarters of FY2018 and FY2017; the numbers are given in the Australian dollar.

Source: Singtel FY2018 first quarter earnings announcement

In Australia, operating revenue was up 6.0%, driven by higher mobile and NBN (National Broadband Network) revenues. This was partially offset by a decline in Wholesale Fixed revenues.

During the reporting quarter, the Australia Consumer sub-segment’s content and programming costs grew faster than revenue, resulting in EBITDA rising just 2.9%. The EBITDA margin slipped from 35.7% last year to 34.7%.

The number of mobile subscribers in Optus grew by 4.6% year-on-year to 9.77 million, with 4G subscribers growing by 19% to 5.88 million. But, the blended average revenue per user (ARPU) in was down by 2.7% in Australian dollar terms.

Editor’s note: Articles reviewing the performance of the Group Enterprise and Group Digital Life segments have been published. They can be found here and here.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.