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Singapore Telecommunications Limited’s Latest Full Year Earnings Update: What Happened With Its Enterprise 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.

In a previous article, I had discussed the results of the Group Consumer business. Here are three important things investors may want to know about the Group Enterprise segment’s latest earnings update [Editor’s note: An article on the Group Digital Life business has been published. It can be found 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 Enterprise segment was flat. Growth in the ICT and Equipment Sales businesses were offset by a decline in traditional carriage services. But, EBIT (earnings before interest and taxes) fell by 3.9% as a change in the sales mix, pressure in traditional products, and investment in new growth platforms took their toll.

2. Performance of the Singapore business

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


Source: Singtel FY2018 earnings update

ICT revenue grew 4% in FY2018 mainly due to higher demand in the cyber security and managed services businesses.

Meanwhile, the segment’s traditional telecommunication services (mobile communications, international telephone, and national telephone) were all facing challenges. It’s somewhat surprising to see that revenue from Data and Internet services also declined.

3. Performance of the Australia business

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


Source: Singtel FY2018 earnings update

The Australia Enterprise sub-segment had a decent year, as operating revenue and EBITDA both increased. As the table showed, there was also broad-based growth at the Australia Enterprise sub-segment, with most businesses posting revenue growth other than voice services. A reduction in legacy voice services resulted in the fall, but Singtel noted that the business still outperformed its industry.

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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.