SINGTEL’S PROFIT LOWEST IN 16 YEARS
Southeast Asia’s largest telco plans to keep lid on expenses after earnings drops to S$3.1b
SINGAPORE Telecommunications Ltd (Singtel) yesterday posted its smallest annual profit in 16 years partly due to the intense competition faced by its regional associates in India and Indonesia.
The telecomunications company (telco) said it would attempt to keep a check on its expenses.
Singtel, Southeast Asia’s largest telco, reported a net profit of S$773 million (RM2.4 billion) for the quarter ended March 31, almost flat versus the year-ago period. Its underlying net profit, which excludes exceptional items, dropped 15 per cent to S$697 million.
“Intense competition has affected the markets in India and Indonesia this past year,” said
Singtel chief executive officer Chua Sock Koong in a statement.
The company continued to be optimistic about the growth potential of its associates’ markets, she added.
Analysts have previously said the company should seek to cut some costs to boost margins.
Singtel said it would use digitalisation and automation to improve customer experience and achieve a leaner cost structure, and expects the initiatives to deliver cost savings and avoidance of about S$490 million for fiscal year 2020.
The telecoms operator exceeded its cost-saving target and achieved S$541 million for fiscal year 2019.
The company reported a net profit of S$3.1 billion for the year ended March 31 this year versus S$5.47 billion a year ago, which had included a divestment gain from the listing of its broadband unit NetLink NBN Trust.
Analysts had an average estimate of S$3.08 billion for the fullyear net profit, according to Refinitiv data, which showed the results marked Singtel’s lowest headline profit since its 2003 fiscal year.
Underlying net profit for the year dived 21 per cent to S$2.83 billion.
OCBC analyst Joseph Ng, in a note, said Singtel’s fourth-quarter results were below his expectations. He maintained his “buy” rating, but put its fair value estimate of S$3.30 under review.
The group’s consolidated revenue is expected to grow by a mid-single digit and its consolidated earnings before interest, tax, depreciation and amortisation (ebitda) is forecast to be stable for the year ending March 2020.
The company’s shares were trading nearly one per cent lower at S$3.12 at midday yesterday, while the broader market was almost flat.