Reduced revenue in some areas, higher finance costs and lower contributions from regional associates hit earnings at telco Singtel in the third quarter.
Net profit came in at $890 million, down 8.5 per cent from the same period last year, it announced yesterday before markets opened.
However, operating revenue for the three months to Dec 31 rose 4 per cent to $4.6 billion, in large part due to strong contributions from its core and digital businesses, while its Australian unit Optus recorded its highest quarterly postpaid customer growth.
The decline in earnings in the quarter was due mainly to lower profits at subsidiaries Airtel, Telkomsel and Globe, as well as lower contributions from NetLink NBNTrust following Singtel's divestment of its majority stake in the company. All told, pre-tax earnings at Singtel's regional associates slipped 18 per cent from the year earlier, with Airtel taking a big hit.
Airtel in India was affected by the cut in domestic mobile termination rates and intense competition in India.
Singtel has moved to raise its stake in Airtel by 0.9 percentage point to 39.5 per cent through a proposed preferential allotment for new shares that was announced on Feb 5.
Earnings per share was 5.45 cents, 9.6 per cent down from the same period a year earlier, while net asset value per share for the quarter was $1.81, up from $1.73 as of March 31 last year.
Group chief executive Chua Sock Koong told a briefing yesterday: "It is our stated policy that under the right terms and conditions, we would want to increase the shares in our associates.
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AT A GLANCE
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REVENUE: $4.6 billion (+4%)
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NET PROFIT: $890 million (-8.5%)
"We are confident of the longer-term future of India and the mobile market in India, and the recent upped stake in the Airtel Group... is a step that is very consistent with our investment policy."
But she added that Singtel is "not in a hurry" to increase its interest.
Ms Chua noted: "I also don't want to give the impression that we're expecting the Indian market to dramatically improve over a short period of time...
"We are bullish about the market in the longer term, but don't want to give you the wrong impression that we expect things - you know, the market competitive situation, the pricing pressures - to disappear in a short period of time."
Earnings at Telkomsel in Indonesia fell due to heightened competition in data and declines in traditional voice services, while Globe's numbers in the Philippines were affected by higher depreciation and finance costs on network investments.
Singtel's digital marketing arm, Amobee, has had a second straight quarter of growth but the Singapore consumer business recorded a 5.5 per cent slide in operating revenue.
Singtel noted "a highly competitive market" as a factor behind the drop in the segment's turnover.
Mr Yuen Kuan Moon, chief executive of the Singapore consumer business, said in response to a question on Australian telco TPG Telecom's imminent arrival: "I think even without TPG, the market is competitive enough...
"And obviously, with TPG coming in, we will be watching them very closely. We are looking at all their different moves in Australia as well as in Singapore, and we will take them seriously, and we are ready to compete."
Singtel shares closed four cents down at $3.40 yesterday.