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Singapore Telecommunications Limited’s Latest Quarterly Results: Key Highlights From Its Consumer Business

Singapore Telecommunications Limited (SGX: Z74) or Singtel, is the biggest among the three telcos in Singapore. The other two are M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3). The group has three business segments, namely consumer, enterprise and digital life.

The company has recently reported its second-quarter earnings for the financial year ending 31 March 2018 (FY2018). In this article, we will look at the key highlights from the consumer business segment.

A bird’s eye view of the consumer business segment

Source: Singtel’s FY18 second-quarter management discussion and analysis

For context, Singtel generated total sales of S$4.3 billion for FY18’s second-quarter.

The consumer segment contributed a significant portion of its topline. From the above, we can see that consumer business revenue was up 2.3% year-on-year to S$2.4 billion. Meanwhile, earnings before interest and taxes (EBIT) grew faster at 6% year-on-year due to lower operating expenses.

The consumer business can be further divided into Singapore and Australia, which we will talk about next.

Singapore consumer business

Source: Singtel’s FY18 second-quarter management discussion and analysis

Singtel’s Singapore consumer sales comes from mobile communications, residential pay TV, fixed broadband, sales of equipment, international telephone, national telephone and others.

For the second-quarter, revenue slipped by 2.1% year-on year. The management team said that the on-going voice to data substitution, weaker equipment sales and lower international telephone revenue led to weaker sales. On the flipside, sales in residential pay TV and fixed broadband improved compared a year ago.

Meanwhile, operating expenses declined due to lower selling and administrative expenses, cost of sales and traffic expenses. The lower expenses led to higher EBIT overall, which rose 7.7% year-on-year.

Among the business highlight for the quarter, Singtel launched Singapore’s first mobile add-on plan with unlimited local data, talktime and SMS/MMS that provides peak mobile data speeds of 500 Mbps nationwide.

Australia consumer business

Source: Singtel’s FY18 second-quarter management discussion and analysis

Singtel’s Australia consumer sales comes from mobile, mass market fixed and wholesale fixed.

For the reporting quarter, operating revenue declined 1% year-on-year to A$1.7 billion. Management said that the decline was due to lower equipment sales. Like Singapore, total operating expenses in Australia was lower by 3.7% due to lower in cost of sales and selling and administrative expenses. Lower expenses resulted in a 0.6% growth in EBIT year-on-year.

A Foolish takeaway

As we can see, Singtel’s consumer business saw marginally lower revenue in both Singapore and Australia (in constant currency terms). The latter, however, reported marginally higher revenue in Singapore dollar terms.

Interestingly, both businesses segments also reduced operating expenses.

Lower costs resulted in EBIT growth in both segments, which should be pleasing for investors.

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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.