Singtel's profits slid 26% YoY in Q1

This is attributed to Airtel’s charges for regulatory costs.

Singapore Telecommunications’ (Singtel) post-tax profits crashed 26% YoY to $574m in Q1 from $773 in 2019, according to an SGX filing.

This is attributed to Airtel’s exceptional charges for regulatory costs, including the adjusted gross revenue matter and a one-time spectrum charge. Singtel took a net exceptional charge of $302m this quarter, mainly arising from Airtel’s provision for the spectrum charge.

Singtel’s operating revenue also declined 10% YoY at $3.9m over the same period, a result of lower mobile service revenue and equipment sales. Underlying net profit also decreased 15% YoY to $594m due to continuing data price competition and weak consumer sentiment.

Meanwhile, Singtel’s regional associates continued to drive data usage growth, with pre-tax contributions rising 25% to $523m in Q1.

In Singapore, mobile service revenue was down 12% in Q1, as roaming and prepaid services were impacted by travel restrictions. The supply disruptions for certain handsets and weaker consumer spending also caused a steep decline in equipment sales. Meanwhile, revenue from fixed services rose 2% with the continued growth in broadband and TV whilst earnings before interest, taxes, depreciation, and amortization (EBITDA) was up 5% due to tighter cost control and wage credits.

Further, the group enterprise revenue slid 5% over the same period due to the decline in mobile service revenue from roaming and slide in equipment sales. ICT revenue rose on strong contributions from NCS, which closed the year with an order book of $3.2b, whilst cyber security revenue was up 1.9% with growth in Asia and the US, offset by weaker performance in Australia.

The group digital life’s revenue for the quarter also dipped 15% as contributions from digital marketing arm Amobee fell. The cut in advertising budgets by brands and advertisers due to COVID-19 has further impacted Amobee’s business from March.

For the full financial year ending March, the group’s financial position remained healthy with net debt standing at $12.50b, including $2.1b of lease liabilities, whilst free cash flow rose 4% to $3.78b with the impact of changes in accounting standards, positive working capital and lower tax payments. The group also strengthened its liquidity with $4.2b raised through credit facilities last month.

Singtel’s board is recommending a final ordinary dividend per share of 5.45 cents to conserve financial headroom, bringing the total ordinary dividend per share for the year to 12.25 cents and representing a payout of approximately $2b.