Singtel sees fall in Q3 earnings, logs revenue recovery for second straight quarter

SINGAPORE Telecommunications (Singtel) posted a fall in its operating revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) for its third quarter ended Dec 31, 2020.

In a business update announced on Wednesday, the group posted an operating revenue of S$4.24 billion for the quarter, down 3.2 per cent year on year. Meanwhile, Ebitda stood at S$1 billion in Q3, down 13.5 per cent from the year-ago period. Both figures exclude revenue from the national broadband network (NBN) migration.

But on a quarter-on-quarter basis, excluding NBN migration revenue, operating revenue and Ebitda rose 9.9 per cent and 3.2 per cent respectively.

The increase in operating revenue from the preceding quarter - indicating the second consecutive quarter of revenue recovery across the group's businesses - was driven mainly by higher equipment sales revenue on festive promotions and strong demand for popular premium handsets.

However, it was partially offset by lower NBN migration revenue due to the near-completion of the NBN rollout.

Operating revenue for the group's Singapore consumer business fell 10.8 per cent to S$504 million year on year, largely due to reduced roaming, prepaid mobile and voice revenues.

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The usage of roaming and prepaid services has been badly hit the plunge in the number of tourists and foreign workers, noted Singtel in its business update.

Consequently, Ebitda for the business segment, which included S$3 million of Jobs Support Scheme credits, fell 21.8 per cent to S$154 million.

In Australia, assuming constant exchange rates for the Australian dollar and United States dollar from the year-ago period, operating revenue for the consumer business declined 8 per cent, with Ebitda falling 24.9 per cent. This comes as a result of the "steep" fall in NBN migration revenue year on year, following the near-completion of the NBN rollout, from A$233 million (S$239 million) to A$72 million in Q3 FY21.

Mobile service revenue was stable, as lower roaming and prepaid mobile revenues were mitigated by higher penetration of Optus Choice plans, which offer improved margins, said the group.

Prepaid mobile was affected by the lower number of tourists and foreign students and intense price competition over the festive period.

As for its group enterprise business segment, operating revenue fell 1.3 per cent year on year to S$1.52 billion; Ebitda slipped by a smaller margin of 0.8 per cent year on year to S$380 million.

Singtel noted that its "strong ICT revenue growth of 7.9 per cent mitigated the decline in the legacy carriage business".

In particular, the group's ICT arm, NCS, recorded "especially strong" bookings - S$809 million for the quarter, with a pipeline of projects in the public service, financial and commercial sectors.

Yuen Kuan Moon, group chief executive of Singtel, said: "While we continue to feel the effects of the pandemic with roaming and prepaid revenues affected by travel restrictions, ICT continued to put in a strong showing led by NCS and Australia enterprise, as businesses accelerated their digitalisation efforts."

Though the outlook remains uncertain, Mr Yuen believes that the group is well positioned for the new normal, especially with its 5G rollout, the scaling of NCS and the digital bank joint venture in Singapore. He added that while the pandemic has "compounded intense competition in both Indonesia and the Philippines", he remains positive about the growth potential for the group's regional associates, as the demand for digital services continues to rise.

Shares of Singtel ended Wednesday S$0.01 or 0.42 per cent lower at S$2.40, before the business update.