Singtel Earnings Weighed by Australia Outage, India One-Offs — Update

By Amanda Lee

SINGAPORE--Singapore Telecommunications' profit and revenue fell in its latest quarter, weighed down by charges related to units in India and Australia alongside weak spending at home.

Singapore's largest mobile network operator said Friday that net profit fell 13% from a year earlier to 465 million Singapore dollars (US$346.2 million) in its fiscal third quarter ended December.

The drop was mainly due to a S$54 million provision related to the recent network outage in Australia, where its Optus subsidiary operates, and to one-offs at its Indian associate company Bharti Airtel, mainly from a revaluation of foreign-currency convertible bonds. The charges pushed exceptional items to S$94 million, up from S$28 million a year ago.

Operating revenue fell 3.2% on year, partly due to the absence of contributions from former cybersecurity unit Trustwave. The company also flagged weak corporate and consumer spending in Singapore, along with price competition and a "continued shift in the market to lower-end plans" in the city-state.

Group Chief Executive Yuen Kuan Moon highlighted that underlying results were "stable despite a tough macroeconomic environment and persistent currency headwinds." Quarterly underlying net profit, which strips out exceptional items, was flat at S$559 million.

CGS-CIMB analyst Kenneth Tan said the bottom line missed expectations, but that underlying net profit was "largely in line," helped by healthy growth at subsidiaries, with stronger-than expected margins in Australia offering a sign that cost cuts "likely started to bear some fruit."

Despite the earnings miss, Citi analysts caution against "taking a negative outlook" toward the company, seeing room for improvements ahead.

Singtel has scope to make significant cost reductions in the fourth quarter, the analysts said in a note, "based on its cost-cut program and the full elimination of Trustwave losses."

Citi keeps a buy rating on the stock, with a S$2.86 target.

Shares were down 1.3% after the results, extending losses so far this year to 4.5%.

Write to Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

February 22, 2024 23:38 ET (04:38 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.