Singtel profit falls 6% in June quarter

Singtel has reported a 6% decline in net profit for the June quarter as a result of lower contributions from the company’s minority-owned regional associates and workforce restructuring charges at wholly-owned Australian subsidiary Optus.

Profit for Singtel’s fiscal first quarter fell 6% to S$892 million ($654 million), despite an 8% increase in operating revenue to S$4.23 billion.

Singapore consumer revenue increased 2% due to growth in data usage, home services and equipment sales offsetting declines in voice and roaming services. Consumer revenue from Australia meanwhile increased 6% across mobile and fixed services.

Group enterprise revenue meanwhile increased a slim 1% as growth in ICT services partially offset a decline in traditional carriage services. Digital services unit Group Digital Life’s revenue surged 91%, driven by digital advertising subsidiary Amobee’s strong performance across both social and media advertising.

But Singtel’s share of pre-tax earnings from regional associates fell 3.8% – or 6.6% in constant currency – to S$673 million, as a result of the shrinking profit at India’s Bharti Airtel, which is facing intense competition due to the entry into the market of disruptive new entrant Reliance Jio Infocomm.

Excluding the impact of Airtel’s 42% lower pre-tax profit contribution, Singtel’s underlying net profit would have increased 3%.

By contrast, Indonesia’s Telkomsel increased its pre-tax profit contribution by 18% due to strong growth in data and digital services.

“We’ve had a good start to the year with a more challenging business environment. This speaks to the resilience of our core consumer business and the investments we’ve made in the digital space in our efforts to grow new businesses,” Singtel group CEO Chua Sock Koong said.

“We are encouraged by their performance as they scale up to capture the opportunities in the new economy.”