SingTel Profits Boosted by Overseas Gains
SingTel's profits have risen healthily thanks to sales growth at home and overseas, with mobile units in Australia and India turning in particularly strong performances.
Net income at Singapore's biggest operator rose 11.2% in the last three months of 2014, to 970 million Singaporean dollars ($776 million), compared with the same part of 2013, while operating revenue was up 3.8%, to S$4.4 billion ($3.5 billion).
Although Singaporeans have continued to splurge on mobile data services and higher-speed broadband connections, SingTel has been attaching bigger discounts to smartphones to fuel interest.
Such generosity proved costly in the October-to-December quarter, triggering a 3% decline in overall EBITDA, to S$1.2 billion ($960 million), compared with the same period of 2013.
But the Singaporean operator owns stakes in some of Asia's biggest phone companies, including India's Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Indonesia's PT Telekomunikasi Selular (Telkomsel) , and it generates most of its revenues and profits outside its domestic market.
SingTel Optus Pty. Ltd. , its wholly owned Australian subsidiary, accounts for about 57% of Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY)'s sales and has been working hard to erode Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)'s dominance in the mobile sector.
Earlier today, the Australian incumbent said it had finished 2014 with 16.4 million mobile customers, generating 5.3 billion Australian dollars ($4.1 billion) in mobile revenues in the last six months of the year. (See iPhone Hunger Fuels Telstra Earnings Growth.)
With 9.4 million on the same date, Optus remains a long way behind, although it flagged customer growth in both its prepaid and postpaid businesses in 2014 and also managed to boost average revenue per user.
More impressively, SingTel also reported a 7% year-on-year increase in revenue in Australia's consumer market in the recent quarter, to A$1.9 billion ($1.5 billion).
All of this indicates there has been a dramatic turnaround since the October-to-December quarter in 2013, when Optus revealed that mobile revenues had fallen by 7.6%, compared with the last three months of 2012, and that its mobile-phone business had lost 160,000 customers in 2013.
"We proactively acquired and re-contracted customers on the back of smartphone launches and successfully upgraded them to higher-tiered data plans," said Chua Sock Koong, SingTel's CEO, in explaining the turnaround.
Optus said its 4G network was available to 80% of the country's population by the end of 2014 and that it aimed to boost coverage to 90% by April.
In its own statement, Telstra claimed 90% 4G coverage at the end of last year and pledged to make services available to 94% of the population by mid-2015.
Mobile growth in India and the South Asia region also fueled earnings improvements for SingTel in the recent quarter.
The pre-tax profit contribution from Bharti Airtel -- in which SingTel holds a 32.4% stake -- rose by 36.7% year-on-year, to S$202 million ($162 million). India's biggest mobile operator by customer numbers, Bharti Airtel, earlier this month reported year-on-year profit growth of 135% for the October-to-December quarter thanks to a rise in subscriber numbers and the take-up of 3G data services. (See India's Mobile Subs Base Nears 1 Billion.)
SingTel also owns 35% of Telkomsel, 23.3% of Thailand's Advanced Info Service plc (AIS) and 47.2% of Filipino operator Globe Telecom Inc. Overall pre-tax contributions from these associates and a handful of much smaller interests were up 28.7%, to S$683 million ($546 million).
— Iain Morris, , News Editor, Light Reading