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Singapore Telecommunications Limited’s Latest Full Year Earnings Update: What Happened With Its Associates and Joint Ventures?

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.

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.

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 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 fourth quarter of FY2018, operating revenue declined by 2% year-on-year due to an 18% fall in voice and SMS revenues on the increased use of smartphones and apps. Singtel’s share of Telkomsel’s profit before tax suffered a fall of 22% to S$289 million due to the aforementioned weaker revenue, higher expenses due to network investments, and the depreciation of the rupiah against the Singapore dollar. Telkomsel’s total mobile customer base decreased by 3.6 million from the preceding quarter, with the total mobile customer base increasing by 23 million, or 14%, from a year ago. Telkomsel ended March 2018 with 193 million mobile customers; this includes 108 million data customers.

2) AIS: Service revenue rose 6% on higher data revenue (mainly from the mobile postpaid customer segment) and growth in fixed broadband revenue. AIS’s revenue growth and better cost-management resulted in a 7.5% increase in Singtel’s share of pre-tax profit to S$95 million. The telco’s mobile customer base declined by 0.6 million (1.5%) year-on-year to 40 million, but was stable on a sequential comparison.

3) Airtel: Competition remained intense for Airtel in India, which led to a 20% year-on-year drop in mobile revenue; Airtel’s overall revenue in India fell by 13% as a result. The lower Mobile revenue was caused by a 27% fall in the average revenue per user (ARPU) to Rs 116. On a positive note, Airtel grew its mobile customer base by adding a record 14.1 million customers in India in the reporting quarter. Airtel had 304 million mobile customers in India as of 31 March 2018, up 11% from a year ago.

4) Globe: Continued growth in demand for internet and data connectivity services drove an 8% year-on-year increase in Globe’s service revenue. Operating expenses were stable despite the growth in revenue, and led to a 21% increase in the telco’s pre-tax profit in Philippine peso terms. But, an 11% fall in the peso against the Singapore dollar meant that Singtel’s share of Globe’s pre-tax profit was up by only 9.3% in Singapore dollar terms to S$81 milion.

5) Intouch: Singtel’s share of Intouch’s pre-tax profit was S$32 million in the reporting quarter, 21% higher year-on-year. This included a gain from the sale of an investment.

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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.