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Singapore Telecommunications Limited’s Latest Quarterly Results: Key Highlights From its Enterprise 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.

Recently, the company has 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 enterprise business segment.

A bird’s eye view of the enterprise business segment

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

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

The enterprise business contributed $1.7 billion to the quarter’s topline, up 5.5% year-on-year. The management said higher sales from info-communications technology (ICT)  in Singapore and Australia boosted the topline. On the flipside, the rise was held back by a decline in traditional telco services.

Unfortunately, operating expenses outpaced revenue growth due to cost increases that happened across the board. As a result, Singtel’s earnings before interest, taxes, depreciation and amortisation (EBITDA) was lower by 5.4% compared to the same period last year.

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

Singapore enterprise business

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

Singtel’s Singapore enterprise sales comes from managed services, business solutions, data and internet, mobile communications, international telephone, national telephone, sales of equipment and others. The first two fall under the ICT segment.

Overall, enterprise ICT revenue grew 12% year-on-year mainly from cyber security, and the provision of infrastructure services.

From the above, we can also see that traditional telecommunication services like international telephone, and national telephone are experiencing sharp sales declines. Interestingly, Singtel is also facing challenges in enterprise mobile and data.

To round it off, Singapore enterprise EBITDA was down 7.5% year-on-year to S$403 million.

Australia enterprise business

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

Like its Singapore enterprise business, Singtel’s Australia enterprise business saw an improvement in ICT services, which was offset by weaker traditional services in voice. Nevertheless, the Australia enterprise segment delivered A$415 million in sales, up 5.7% year-on-year. EBIT was also up 3.8% year-on-year to $68 million.

A Foolish takeaway

SingTel’s enterprise business saw similar trends in both Singapore and Australia where its ICT business grew, but was offset by decline in traditional telecommunication services. Singapore’s lower EBITDA, though, dragged down its the enterprise segment’s EBITDA overall.

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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.