Singtel posts fiscal 2Q swung to S$668 million net loss as Airtel hit by India court ruling

Singtel booth at CommunicAsia 2019Singtel booth at CommunicAsia 2019

Singtel reported Thursday its fiscal second quarter swung to a net loss of S$668.1 million from a year-ago net profit of S$667.2 million due to an exceptional item related to Airtel.

Excluding Airtel, net profit would have risen 4 percent on-year, Singtel said.

Operating revenue for the quarter ended 30 September fell 2.76 percent on-year to S$4.15 billion, Singtel said in a filing to SGX.

“Airtel was impacted by an adverse court ruling against the industry on the definition of ‘adjusted gross revenue’ (AGR) for the Indian telco industry. Airtel together with other carriers in India continue to make representations to the Indian government for relief and to seek further clarification on the AGR matter,” Singtel said.

“In the interim, Airtel has recorded an exceptional provision this quarter of approximately S$5.49 billion. Singtel’s proportionate share of this
provision amounted to S$1.93 billion (pre-tax),” it added.

Chua Sock Koong, Singtel group CEO, said in the statement that outside of the court ruling, Airtel has made “positive strides” amid industry consolidation, gaining market share and increasing mobile service revenue for a third straight quarter.

Regional associates’ contributions rise

“The weak global economic environment has affected the industry although on a positive note, our diversified earnings base and our cost management have lifted our performance,” she said. “While we expect current challenging conditions to continue into 2020, we will invest to strengthen our market position, enhance our core networks and build strategic capabilities to capture growth, and be 5G-ready.”

Regional associates profit before tax rose 36 percent on-year to S$414 million in Singapore dollar terms and increased 28 percent on-year in constant currency terms, Singtel said. Excluding Airtel, the profit before tax contribution would have been S$526 million, up 10 percent in Singapore-dollar terms and 5 percent higher in constant currency terms, Singtel said.

“Our regional associates have continued to execute well, with increased contributions from Thailand and the Philippines, as well as market stability in Indonesia,” Chua said. “As leading players in their respective markets, our associates will continue to benefit from the growing demand for digital content, products and services.”

Singapore consumer

Within Singapore, the consumer business delivered strong results despite intense competition and price pressure, Singtel said.

The Singapore consumer segment posted operating revenue for the quarter rose 1.7 percent on-year to S$563 million on higher equipment sales after the launch of premium handsets, while the earnings before interest and tax (EBIT) increased 3.8 percent to S$126 million.

However, mobile service revenue fell 5.2 percent on lower voice usage from continued voice to data substitution, data price pressures and the impact of the amortization of higher handset subsidies, Singtel said.

The Australian consumer business posted operating revenue increased 4.8 percent on-year to A$1.92 billion on higher NBN revenue, while EBIT rose 18.7 percent on-year to A$296 million.

Singtel declared an interim dividend of 6.8 Singapore cents.

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