Airtel drags Singtel's net profit, down 6% to S$892m

Singtel recorded a 6% drop in its net profit due to Airtel's increasing competition in India.

Airtel Reuters

Asia's telco powerhouse Singtel reported a 6 percent fall in net profit to S$892 million for the past quarter ending in June, with its associates to blame.

Amongst its regional associates, Airtel faced intense price competition in India, with its pre-tax profit contribution dropping to 42 percent despite the robust cost management and lower depreciation in the African segment.

Without Airtel, the group's net profit would have gained 3 percent more.

For the past quarter, Singtel's bottom line was also badgered by the exceptional charges from workforce restructuring at Optus.

On the other hand, Telkomsel increased its pre-tax profit contribution by 18 percent due to robust growth in data and digital services.

In Singapore, the group's revenue rose 2 percent as data usage, home services, and equipment sales offset declines in voice and roaming services.

Singtel CEO said despite some minor mishaps, the group still recorded a good start to their FY18.

"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. We are encouraged by their performance as they scale up to capture the opportunities in the new economy," she said in a statement.

For the said quarter, the group made investments in the network to better its services.

The CEO said the telco giant will deploy 800Mbps LTE mobile speeds at selected high-traffic locations across Singapore by the end of August 2017.

Additionally, Singtel-owned NetLink NBN Trust was successfully listed in Singapore, raising proceeds of S$2.3 billion. This public offering fulfils Singtel's undertaking to the Info-communication Media Development Authority to divest its 100% stake in NetLink Trust to less than 25% before 22 April 2018. This will, therefore, result in a net gain of approximately S$2 billion that will be recorded in the second quarter.

Optus is also making a huge step by investing A$1 billion in its mobile network over the next year to enhance capacity and 4G coverage by another 500 sites in regional Australia.

"The growth potential of our regional associates' markets remains strong despite the headwinds, and strategic investments in networks and customer experience will lay the foundation for future growth. The Group's customer base grew another 3 percent in the quarter to 655 million customers across the region," the group's chief said.