Digital business propels Singtel revenue to 'more than double'

Singtel has revealed that recent growth observed in its business was bolstered by strong contributions from its core and digital businesses. This was for the third quarter of the financial year 2018. These business which continued to scale, saw revenues "more than doubling". Amobee, its digital marketing arm, also delivered positive earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the second straight quarter, as it continues to “leverage synergies” from the acquisition of Turn.

Overall, Singtel’s group digital life segment jumped 106% and overall EBITDA continued to progress despite higher investments in content and technology. This includes investments in its mobile video streaming service HOOQ. HOOQ also expanded its content suite by securing exclusive rights to the latest Hollywood content and developing local content through partnerships.

According to Chua Sock Koong, Singtel group CEO, Singtel’s digital transformation strategy has delivered, with digital and ICT services accounting for 23% of our revenue during that quarter. Chua added that the digitalisation of its services across its group has enabled the company to deliver better customer experiences and manage costs. Singtel’s Australia business, particularly mobile, also drove profitable growth.

“We see our investments in network infrastructure and spectrum as critical to our future growth and longer term returns in this digital world,” Chua said.

The statement added that operating revenue for the quarter increased 4% to SG$4.6 billion while EBITDA increased 6% to SG$1.29 billion. Singtel saw a decline in voice revenue, higher network depreciation and amortisation from increased infrastructure investments and overall lower earnings. Meanwhile, net profit was down 9% to SG$890 million while underlying net profit declined 8% to SG$898 million. Singtel saw a group customer base growing another 3% in the quarter to 688 million customers across the region.

In Singapore, consumer revenues declined 6% due to ongoing voice to data substitution and lower equipment revenues. This also saw mobile data growth partially offsetting “the erosion in voice” while higher demand for data roaming packages helped moderate the decline in roaming revenue.

Singtel’s equipment sales were affected by delays in popular handset launches and higher demand for SIM-only plans. Mobile communications revenue was impacted by the increased mix of customers switching to SIM-only plans. As such, EBITDA was down 9% as a result of lower voice revenue and the cessation of a Premier League sub-licensing agreement.

The statement added that digitalisation has been a key focus for Singtel to drive productivity and improve customer experience.

Online sales currently account for 20% of all sales in Singapore.

According to Singtel, regional associates continued to post strong customer growth and higher data consumption. In Indonesia, Telkomsel’s earnings fell as a result of heightened competition in data and declines in traditional voice services. Singtel’s Australian consumer business also recorded its highest quarterly postpaid customer growth and also saw profitable growth in its mobile segment particularly.

Chua explained that despite the current business headwinds, Singtel’s regional associates’ markets remain attractive with strong mobile data growth.

Singtel’s group enterprise revenue was revealed to be down 4% due to the timing of projects, one-off product sales last year and price erosion in traditional carriage services. That being said, Singtel’s group enterprise business still remains a market leader in Asia Pacific for telco and ICT services. The company saw a 6% increase in cyber security revenue as further investments were made to build cyber capabilities.

In Singapore, Singtel collaborated with A*Star, Nanyang Technological University and the National Research Foundation to spearhead R&D in artificial intelligence, advanced data analytics, robotics and the internet of things. This included the establishment of a SG$42 million corporate laboratory called Singtel Cognitive and Artificial Intelligence Lab for Enterprises. This is to develop applications for use in the areas of public safety, smart urban solutions, transportation, healthcare and manufacturing.

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