Singtel’s Q1 Profit Drops 72% as Airtel Stake-Sale Gain Fades; Underlying Earnings Beat Estimates

Singapore Telecommunications (Singtel) reported a 71.6% year-over-year drop in first-quarter net profit to S$818 Mn, as gains from a partial sale of its stake in Bharti Airtel and the Intouch-Gulf Energy merger boosted the corresponding period last year. Net profit stood at S$2.88 Bn a year ago.

However, the underlying business showed a markedly different trajectory. Underlying net profit rose 21% to S$831 Mn from S$686 Mn, driven by stronger contributions from Airtel, Thailand’s Advanced Info Service (AIS), NCS, Optus and Digital InfraCo. The result exceeded a S$746.1 Mn Visible Alpha consensus estimate cited by Reuters.

The quarter also included a first-time S$153 Mn dividend from Thailand’s Gulf Development Public Co, which helped Singtel record net finance income, compared with a finance expense in the year-earlier period, boosting the underlying figure beyond what operating momentum alone would have delivered.

Group operating revenue and earnings before interest, taxes, depreciation and amortisation rose 4.9% and 8.7%, respectively, helped by improved performances at NCS, Optus and Digital InfraCo, as well as a stronger Australian dollar. Those gains were partly offset by continued weakness in Singtel’s home market.

Singtel Singapore’s operating revenue fell 3.1% to S$901 Mn from S$929 Mn, as price competition continued to weigh on the business. Mobile service revenue declined 4% on lower average revenue per user. Again, growth in data and internet services was insufficient to offset declines across mobile, information and communication technology and legacy services.

The pressure also reached earnings. Singapore EBITDA fell 4.6% to S$363 Mn from S$380 Mn, underscoring the contrast between the group’s domestic telecom operation and the faster-growing businesses elsewhere in its portfolio. Group CEO Yuen Kuan Moon said Singtel Singapore remained focussed on its three-brand strategy spanning Singtel, Gomo and Hi! as it navigated the pricing pressure.

Regional associates provided the strongest counterweight at the group profit level, where their equity-accounted contributions sit. Post-tax contributions rose 16.1% to S$543 Mn from S$468 Mn, led by Airtel and AIS. Airtel’s contribution increased 15.9%, while AIS posted a 32.7% rise, supported by higher mobile and broadband service and cost discipline.

Optus delivered stronger operating earnings at the revenue and cost line. The Australian subsidiary’s operating earnings rose 14% year over year to A$152 Mn, according to Reuters.

Singtel’s enterprise technology arm NCS reported a 29% increase in operating earnings to S$102 Mn, while Digital InfraCo continued to scale its data centre and cloud operations. Digital InfraCo’s operating revenue rose 18.9%, driven by higher contributions from its data centre arm, Nxera, following the start of operations at DC Tuas in Singapore, and growth in cloud services.

Digital InfraCo’s EBITDA climbed 20.8% to S$70 Mn from S$58 Mn, as Singtel draws earnings from investments intended to broaden the group beyond its traditional telecommunications businesses. Yuen said demand for artificial intelligence and cloud infrastructure was supporting contracted capacity growth at Nxera in Singapore and elsewhere in the region.

The results leave Singtel with two sharply different trends in the same quarter. Its statutory profit comparison was distorted by the disappearance of last year’s exceptional gains, while its underlying earnings continued to expand.

At the operating level, however, the divergence is more structural, with regional associates driving group profit growth from outside the consolidated revenue line and Optus, NCS and Digital InfraCo generating revenue and earnings growth from within it, as competitive pressure continues to erode revenue in Singapore.