Singtel blames Australia for sales decline, but profits grow

Singaporean telecoms incumbent SingTel has seen a healthy rise in net profit for the three months ending June despite reporting a fall in revenues it blamed on a “more cautious business environment” and weakness in the Australian mobile market.

Singtel’s net income was up by 7%, to SGD1.01 billion ($796 million), compared with the same period of 2012, thanks to the operator’s efforts to cut costs and despite ongoing investments in spectrum, networks and its digital businesses.

Singaporean telecoms incumbent SingTel has seen a healthy rise in net profit for the three months ending June despite reporting a fall in revenues it blamed on a “more cautious business environment” and weakness in the Australian mobile market.

Singtel’s net income was up by 7%, to SGD1.01 billion ($796 million), compared with the same period of 2012, thanks to the operator’s efforts to cut costs and despite ongoing investments in spectrum, networks and its digital businesses.

In Singapore, the operator spent SGD136 million on additional 4G spectrum during the recent quarter.

However, revenue fell by 5.3%, to SGD4.29 billion, over the same period, largely on account of setbacks at Optus (Sydney, Australia), its Australian subsidiary.

According to Singtel’s statement, its consumer business in Australia reported a 6% decline in revenue, to AUD1.74 billion ($1.58 billion), and said it was pursuing “a strategy focused on yield, while repositioning itself to grow in mobile data services”.

Singtel hopes the launch of new tariffs will help Optus to mount a recovery, saying the offers are designed to remove “bill shock” for customers and encourage mobile data usage.

In its domestic market, by contrast, Singtel managed to increase revenues by 4% and earnings before interest, tax, depreciation and amortization by 20%.

The operator said improvements were driven by subscriber growth and a rise in average revenue per user as customers upgraded to costlier smartphone packages.

It also flagged an impressive 10% increase in consumer fixed-line revenues as customers signed up to pricier triple-play services.

“It was a strong quarter,” said Chua Sock Koong, Singtel’s chief executive. “We continue to make progress in strengthening our high performance core business and create next-generation growth engines in the digital space. We made good strides in our transformational initiatives, improving yield and capturing value from increased data usage trends.”

Singtel’s regional associates posted a 14% increase in pre-tax earnings, to SGD552 million, and the executives were cheered especially by an improvement in India, where Singtel owns more than 30% of leading operator Bharti Airtel (New Delhi, India).

“We are pleased to see some pricing discipline returning to the Indian mobile market and are optimistic that Airtel, as the market leader, is positioned to benefit from this,” said Chua Sock Koong.