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Singapore Telecommunications Limited’s Latest Full Year Earnings Update: What Happened With Its 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-May, Singtel announced its full year earnings update for its financial year ended 31 March 2018 (FY2018). 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 [Editor’s note: Articles discussing the Group Enterprise and Group Digital Life businesses has been published. They can be found here and here.]:

1. The overall result

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

Source: Singtel FY2018 earnings update

In FY2018, revenue for the Group Consumer segment was up 2.7%. But, EBIT (earnings before interest and taxes) actually declined by 2.0% as a result of an increase in depreciation and amortisation charges.

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 FY2018:

Source: Singtel FY2018 earnings update

Revenue for FY2018 declined by 2.7% due to weaker performances across all business lines other than fixed broadband. The affected ones were mobile communications, equipment sales, Pay TV, and national and international phone.

Mobile communications (the largest business within the Singapore Consumer sub-segment) experienced a 3.3% fall in revenue in FY2018. Singtel attributed the lower revenue to a “decline in both local and roaming voice revenues, and higher mix of SIM-only plans partially offset by strong growth in mobile data.”

The Singapore Consumer sub-segment’s EBIT fell harder compared to revenue as higher depreciation and amortisation charges from increased network and spectrum investments took their toll.

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 for the whole of FY2018 and FY2017; the numbers are given in the Australian dollar.

Source: Singtel FY2018 earnings update

In Australia, operating revenue for FY2018 climbed by 3.9% as a result of improvement in both the mobile and mass market fixed services businesses.

Higher NBN (National Broadband Network) migration revenues, and an increase in the number of mobile customers (there was a net addition of 343,000 new mobile services customers). There was also a 340,000 increase in the postpaid handset customer base during the year.

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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.