Telecommunication companies (telcos) had a rough run of late..
Last week, StarHub (SGX: CC3) reported a set of weak financial numbers as it faces headwinds in almost all its business divisions.
Singtel (SGX: Z74), however, bucked this trend by announcing better financial numbers for its latest fiscal 2022 first-quarter business update.
The telco has reported better operating performance as the business environment improved, and a stronger Australian dollar also helped to boost its performance.
For context, Singtel had reported a net loss of S$20 million in the same period last year due to exceptional losses of S$364 million arising from its associate Bharti Airtel.
The latest quarter saw vast improvements.
CEO Yuen Kuan Moon remarked that he is seeing “the return of growth across the board” during the quarter.
So, is the worst over for Singtel and can investors look forward to stronger numbers moving forward?
Let’s take a look at five other highlights from the telco’s latest business update.
1. Stronger underlying net profit
At the group level, operating revenue increased by 7.5% year on year to S$3.8 billion.
If migration revenue from Optus and the government’s job support scheme credits are excluded, operating revenue would have improved even more at 9.4% year on year.
Operating profit jumped by 19.1% year on year to S$312 million.
Underlying net profit (excluding exceptional items) surged by close to 31% year on year to S$451 million.
2. A better performance from Airtel
Singtel’s stable of associate companies also delivered a resilient performance despite a continued challenging backdrop.
Thai associates Intouch and AIS reported relatively stable year on year pre-tax profits.
The telco’s Philippine associate Globe Telecom and Indonesian associate Telkomsel also saw their pre-tax profits holding up well, unchanged from a year ago.
Airtel was the standout performer, reversing its net loss of S$79 million a year ago to post a pre-tax profit of S$64 million.
As a whole, growth in home broadband services due to movement restrictions helped to prop up the associates’ pre-tax profits.
3. Increase in mobile ARPU and broadband revenue
Singapore mobile service revenue saw a slight 1.5% year on year decline, with the total number of mobile customers dipping slightly by 2.8% year on year.
However, the good news is that blended average revenue per user (ARPU) inched up by 2.2% year on year to S$23 per month.
Data usage also saw a significant 52.1% year on year surge from five to eight GB per month.
Fixed broadband revenue improved by 2.4% year on year to S$119 million, in tandem with the 2% year on year increase in broadband lines to 655,000.
4. Better Australian performance
Over in Australia, Optus’ mobile service revenue jumped by 11.1% year on year to S$913 million, despite seeing its number of customers slipping by 3% year on year.
The rise in ARPU for both postpaid and prepaid customers helped to offset this decline, with blended ARPU climbing by 15.6% year on year to A$31 per month.
Data usage also saw a near 20% year on year increase to 12 GB per month, mirroring the situation in Singapore.
5. A bright spot for enterprise business
Singtel’s enterprise division continues to post healthy numbers.
Bookings at its NCS unit surged by 60.9% year on year to S$473 million, and the group aims to slowly morph this division into a digital business-to-business champion.
Revenue from information communication technology (ICT) also crept up 7.5% year on year to S$775 million.
Get Smart: Continued digital transformation
Singtel is committed to advancing its digital transformation, with digital sales accounting for 43% of all its sales transactions for the quarter.
NCS’ transformation is well underway with three new key hires.
The division’s digitalisation journey is also proceeding well with digital, cloud, platforms and cyber services forming 45% of revenue.
Elsewhere, there are growth trends in ASEAN which present unique opportunities for Singtel.
The group has applied for a Malaysian digital bank licence along with partner Grab, hot on the heels of their win late last year for one of Singapore’s digital bank licences.
In Australia, Optus is on track with its planned divestment of up to 70% of its tower assets by the second half of 2021.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.