SingTel turns to to price cuts to boost struggling enterprise segment: report

Group Enterprise earnings slipped 7%.

SingTel reported solid results for the first quarter of its fiscal year, but analysts warn that it may well be losing the battle for the lucrative enterprise segment.

A report from OSK DMG highlights that SingTel continues to witness competitive pressure in the provision for fibre network services for enterprises and has resorted to price discounting.

“SingTel continues to witness competitive pressure in the provision for fibre network services for enterprises and has resorted to price discounting. Group Enterprise (GE) revenue dipped 0.1% y-o-y (-3.5% q-o-q) but EBITDA fell a more significant 7% y-o-y in 1QFY15. The GE business made up 37% of group revenue in 1QFY15 and 40% of consolidated EBITDA,” the report stated.

Meanwhile , CIMB’s Kevin Goh notes that SingTel’s 5.2% year on year earnings decline can be directly linked to its weak enterprise earnings.

“The margin slid 3.1% pts yoy to 32.0% due to lower enterprise earnings given more intense NBN competition and price reduction on contract transition for a large government project,” he noted.