Singapore Telecommunications Limited (SGX: Z74) or Singtel, is one of the three main telcos in Singapore.
Investors might be interested in the company now since its trading just 5% away from its 52-week low price. But before investing in any company, it is important that we understand the fundamentals of a company. In this article, we will try to understand one aspect of the company – how does it make its cash.
The following shows an extract from Singtel’s latest annual report:
Source: Singtel’s 2018 Annual Report
From the above, we can see that the group operates in three business segments, namely, Consumer, Enterprise and Digital Life.
Group consumer segment focuses on providing services such as mobile, pay TV, fixed broadband and voice, as well as equipment sales to consumers.
This segment comprises Singtel’s controlled businesses across Singapore and Australia, as well as its partnerships, mainly AIS and Intouch (which has an equity interest of 40.5% in AIS) in Thailand, Airtel in India, Africa and Sri Lanka, Globe in the Philippines, and Telkomsel in Indonesia.
As a whole, this segment contributed about 78% of Singtel’s 2018 earnings before interest and tax.
Group enterprise segment focuses on providing services such as mobile, equipment sales, fixed voice and data, managed services, cloud computing, cyber security, IT and professional consulting to enterprise customers.
Here, Singtel provides services to customers (mainly through its controlled businesses) across Singapore, Australia, United States of America, Europe and the region. This segment was the second biggest profit contributor to the group for the year ended 31 March 2018.
Group digital life
Last but not least, group digital life focuses on using the latest internet technologies and assets of Singtel’s operating companies to develop new revenue and growth engines by entering adjacent businesses.
It focuses on three key businesses in digital life – digital marketing (Amobee), regional premium over-the-top video (HOOQ), and advanced analytics and intelligence capabilities (DataSpark).
So far, this segment is still loss-making as most of its businesses are still in their early stages of development.
The Foolish conclusion
There are many moving parts to a business that investors should consider. By breaking down the income of Singtel, investors can have a better overview of the telco. This might help them form a better judgement on the long-term prospects of this company.
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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..