Singapore Telecommunications Limited’s Latest Earnings: Key Highlights From Its Associates And Joint Ventures

Singapore Telecommunications Limited (SGX: Z74) is the largest operational telco in Singapore.

The company has three business segments, namely, Group Consumer, Group Enterprise, and Group Digital Life. Within the Group Consumer segment are Singtel’s investments in a number of regional telcos, which are known as the company’s associates and joint ventures. These investments are a very important part of Singtel’s business, as they contributed to 48% of its total net profit in its fiscal year ended 31 March 2017 (FY2017).

In early November, Singtel reported its results for the second quarter of FY2018 (the three months ended 30 September 2017). I thought it would be useful to take a look at how its associates and joint ventures performed during the quarter.

As a quick introduction, Singtel’s main associates and joint ventures are Telkomsel in Indonesia; AIS and Intouch in Thailand; Bharti Airtel in India and Africa; and Globe in the Philippines.

Here’s how each of the associates performed during the reporting quarter:

1) Telkomsel: In the second quarter of FY2018, operating revenue grew 4% year-on-year due to Ramadan festivities and growth in data and digital services, which more than offset lower voice revenue. Telkomsel gained 12.4 million mobile customers from the preceding quarter, with the total mobile customer base increasing by 27 million, or 16%, from a year ago. Telkomsel ended September 2017 with 190 million mobile customers; this includes 98 million data customers.

2) AIS: Service revenue rose 6% on higher fixed broadband revenue as well as data revenue from its mobile postpaid segment. Higher demand for video streaming and an increase in the penetration of 4G devices were responsible for AIS’s service revenue growth. Steep cuts in marketing expenses resulted in 15% growth in EBITDA (earnings before interest, tax, depreciation and amortisation) in local currency terms.

3) Bharti Airtel: Competition in India remained severe for Bharti Airtel. To counter its competitors, the telco offered attractive bundles at low prices, which resulted in impressive voice and data volume growth of 40% and 340%, respectively, compared to the same quarter a year ago. But, Bharti Airtel’s ARPU (average revenue per user) declined 23% to Rs. 145, the lowest ever rate. This led to a decline of 13% in revenue and a larger drop in profit before tax. On a positive note, Bharti Airtel’s mobile customer base and market share in India grew in the quarter. The former increased by 8.5% year-on-year to 282 million.

4) Globe: The telco’s service revenue grew 9% year-on-year, due mainly to growth in mobile data related services. Pre-tax profit increased by 8% in Philippine peso terms despite higher staff costs and network costs to support a growing subscriber base and network expansion. But because of a 7% decline in the Philippine peso against the Singapore dollar, Singtel’s share of Globe’s pre-tax profit in 2017’s third quarter remain unchanged year-on-year. Globe’s mobile customer base had declined by 9.2% to 59.3 million compared to a year ago.

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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.