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Singapore Telecommunications Limited’s Latest 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 early August, Singtel announced its first quarter earnings update for its financial year ending 31 March 2019 (FY2019). 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:

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 first quarter of FY2019 and FY2018:

Source: Singtel FY2019 first quarter earnings update

In the first quarter of FY2019, revenue for the Group Consumer segment was up 1.9% yar-on-year. But, its EBIT fell by 5.1% as a result of lower other income, and 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 the first quarter of FY2019:

Source: Singtel FY2019 first quarter earnings update

Revenue for FY2019’s first quarter was up by 1.7% due to growth in revenue from sales of equipment, Pay TV, fixed broadband, digital services, and mobile network cabling projects. Lower mobile service income due to a decline in voice usage acted as an offset.

The postpaid customer base in Singapore grew by over 16,000 from a quarter ago, mainly from SIM-only and Mobile Share plans. Meanwhile, the prepaid ARPU (average revenue per user) for the Singapore Consumer sub-segment grew in the second quarter of 2018 “on higher data add-ons from strong adoption of content and app bundles, despite the decline in voice and IDD usage.”

Despite higher revenue in the Singapore Consumer sub-segment, its EBIT still fell by 7.4% year-on-year because of higher equipment sales, content, and depreciation and amortisation costs.

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 first quarters of FY2019 and FY2018; the numbers are given in the Australian dollar.

Source: Singtel FY2019 first quarter earnings update

In Australia, operating revenue for the first quarter of FY2018 was up because of a 7.9% increase in revenue from the Mobile business. Singtel’s Mobile revenue in Australia increased primarily because of customer growth and higher equipment sales. During the quarter, there was also broad-based customer growth at the business:

“Mobile customer growth continued with the addition of 60,000 new services this quarter. The postpaid handset customer base grew by 30,0005 , with branded handset customer base increasing by 45,000. Prepaid handset and mobile broadband customer base grew by 19,000 and 11,000 respectively.”

But on the downside, the ARPU for the blended mobile and postpaid handset businesses in Australia declined by 2% and 3% respectively, because of the increasing mix of SIM-only plans and data price competition.

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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.