SingTel Q3 FY2019 Results Highlights

Singapore Telecommunications released their latest quarter results recently. Here are some highlights:

All information are sourced from SingTel’s latest quarter presentation and transcript here.

1. Operating revenue increases 1% year on year, all other P&L metrics continue to face pressure

Makes for grim reading but nothing unexpected.

2. Free Cash Flow declines 10% y-o-y, net debt and gearing remains stable

The free cash flow decline while concerning, is still on course to be able to cover the dividend.

4. Singapore Consumer market remains challenged

Mobile revenue down due to competition and decreased voice revenue.

5. Optus, Group Enterprise and Digital Life are bright spots

Mobile Revenue up due to shift of Australian consumers towards premium networks like Optus and Telstra.

6. Regional associate contributions continue to be under pressure

While regional associate contributions decline, its good to see Airtel’s India operations arresting the rate of decline.

7. FY2019 Outlook cut for EBITDA, Australia Mobile and Group ICT

Cuts largely relate to current trends in the respective businesses with 3 quarters on the books.

8. Interesting soundbites from the analyst call

a) In response to Goldman Sachs’ question on TPG trial impact

With regards to your follow up question on the TPG free trial, I think it is very early days. They’ve just been giving out free SIM cards. We see this as initially testing their network. They’ve not announced any commercial rates post the trial period. So we are monitoring them closely. At this stage, very minimal impact. We do not see any
impact on our business yet.

Yuen Kuan Moon – CEO Consumer Singapore

b) In response to Maybank’s question on the rise of SIM-only plans in SG

In general, more customers move towards a SIM-only plan which we are seeing the trend today. We will see a reduction in handset subsidised plans. On one hand there will be a reduced subsidy but on the other hand you will have to give more data allowance to the SIM only plan. This has been matched up in the subsidy because the handset prices have also been going up and therefore while the quantity of handset subsidy plans may be reducing the absolute amount of subsidy is going up because the cost of the handset has been going up as well.

On balance, we do see a shift but in overall, the margins are comparable and we are pricing it in a way that we are indifferent between the two types of plans so that we can cater to the needs of our customers.

Yuen Kuan Moon – CEO Consumer Singapore

c) In response to monetising Group Digital Lifestyle assets from Nomura,

On the topic of crystallising the value of our Group’s digital businesses, we are very open to different ways to unlock the value. It could come in the form of full or partial IPO in the equity capital markets, or in the form of bringing in strategic investors to take a stake in a particular entity. We also know that before we decide to do any of these things, our businesses must continue to demonstrate that
new growth and momentum as well as profitable growth.

Amongst our digital businesses, we think that Amobee is getting good traction and are quite hopeful that we will see this in the coming couple of years, but we are still several quarters away because we have to continue building the momentum and demonstrate the track record before we start looking at how to start crystallising the value externally.

Samba Natarajan – CEO, Group Digital Life

Final Thoughts

Overall, to me, a obviously negative quarter but with some hope that the worst in Bharti Airtel is coming to an end.

Currently vested with 7,200 shares.

Happy Hunting,
KK