Yahoo Finance 
Growing pains: Restructuring SingTel sees 3Q12 profits slide 8% to S$827m
Long-term growth investments hurt the bottom line.
In a release, Singapore Telecommunications Limited (SingTel) said that it continues to invest in networks and strengthening its core business as well as transformational initiatives to drive longer term growth. As a result of these investments, the Group incurred higher depreciation, spectrum amortisation charges, and increased costs from the acquisition of digital companies.
The Group also registered exceptional charges of S$67 million, including Optus’ ex-gratia payments for the restructuring of its workforce and accelerated depreciation charges related to Globe’s network modernisation and IT transformation programs.
"These factors, together with the impact of the weaker foreign currencies, led to an 8% decline in net profit to S$827 million. Excluding these exceptional charges, underlying net profit fell 2% to S$874 million. Group revenue fell 5% to S$4.60 billion and EBITDA was stable at S$1.26 billion."
The Group said it continues to generate strong free cash flow. For the nine months ended December 2012, group free cash flow rose 1% to S$2.49 billion.
Singapore revenues grew 1% to S$1.70 billion driven by contributions from its new digital services and continued strength of its mobile and ICT businesses. Revenue from Mobile Communications increased 3% to S$507 million as SingTel added a strong 63,000 mobile customers in the quarter. This brings its total customer base to 3.76 million, representing a leading market share of 46.6% as at 31 December 2012.
In Australia, Optus is restructuring the business to drive profitable growth, improve customer experience and capitalise on the growing demand for mobile data. Against a backdrop of an industry slowdown and mandated mobile termination rate cuts, Optus reported stable results. While operating revenue declined 6% to A$2.28 billion, cost efficiencies lifted EBITDA to A$576 million.
The Group also said it has made substantial progress in rolling out 4G or Long Term Evolution (LTE) networks. In Singapore, SingTel will achieve island-wide coverage by the end of March 2013. In Australia, Optus extended its 4G coverage to Brisbane and the Gold Coast, and now covers major capital cities including Sydney, Melbourne, Brisbane and Perth.
The Group’s regional mobile associates, in particular Telkomsel and AIS, recorded robust growth, which were partially offset by lower earnings from Airtel and the weaker regional currencies. Pre-tax earnings grew 1% to S$455 million and would have increased 11% if exchange rates were unchanged from a year ago.
In the quarter, the Group and the regional mobile associates continued to register strong customer growth. As at 31 December 2012, the Group had 473 million mobile customers, an increase of 39.2 million or 9% from a year ago.
Ms Chua Sock Koong, SingTel Group CEO, said: “The performance of the Group demonstrates the resilience of our core operations and focused execution even as we recognise the challenges in the various markets. We are executing our transformation plan to grow in the new digital era, exploiting opportunities in mobile data and enterprise ICT services to grow our share of the customer wallet. The Group is focused on driving growth in mobile data services with continued investment in its infrastructure, attractive tiered data plans and meeting customer demand for higher speeds and better user experience.
We are also actively building and encouraging the necessary culture within the Group to embrace a global mindset and entrepreneurial spirit, and hiring talents from the digital industries to increase our mix of talent.”
More From Singapore Business Review
