Singtel(SGAPY) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The Group's underlying net profit decreased by 28%, reflecting challenges in the core business and lower contributions from associates [9] - Free cash flow fell due to lower operational performance and timing differences in dividend receipts from associates [9][28] - Revenue increased by 4% in constant currency terms, driven by higher equipment sales and growth in ICT and digital services [8] Business Line Data and Key Metrics Changes - ICT services returned to growth, albeit at lower margins, with a significant contribution from technology implementation services [7][34] - In Australia, Optus added 129,000 postpaid customers, while Singapore saw an increase of 36,000 postpaid customers [7] - The mobile revenue in Australia was impacted by a higher mix of SIM-only plans, leading to a revision in revenue guidance from low single-digit growth to stable [21][22] Market Data and Key Metrics Changes - Airtel's performance was affected by intense competition in India, although mobile revenue showed early signs of stabilization [8] - The Singapore mobile market is experiencing a shift towards SIM-only plans, which is impacting overall revenue and ARPU [66][70] Company Strategy and Development Direction - The company continues to invest in network, spectrum, and content to create competitive advantages while progressing with digital transformation [6] - There is a focus on building a best-in-class mobile network in Australia, supplemented with exclusive premium content [19] - The company is exploring various ways to unlock value from its digital businesses, including potential IPOs or strategic investments [101] Management's Comments on Operating Environment and Future Outlook - Management noted that the core business faces heightened competition and voice erosion, impacting overall performance [6] - There is cautious optimism regarding the Smart Nation contracts, with procurement activities slowly resuming [79] - The company does not foresee a multi-year decline in EBITDA, emphasizing that guidance will be updated in the next quarter [83] Other Important Information - The company reported exceptional gains due to changes in lease terms and the deconsolidation of a subsidiary [10] - The cost of sales increased significantly due to higher equipment sales and project-related ICT equipment sales [59] Q&A Session Summary Question: Insights on Singapore mobile business and TPG's free mobile service - Management indicated that the prepaid market is reducing due to fewer foreign workers, but they are monitoring TPG's impact closely [16] Question: Australian mobile business performance and revenue guidance - Management explained that the competitive landscape and promotional activities during the holiday season affected market share dynamics [18][22] Question: Free cash flow decline and future expectations - The decline was primarily due to timing differences in dividend receipts, with expectations of normalization in future quarters [28] Question: Impact of higher data bundles on churn rates - Management noted no significant increase in churn following competitor launches, as they quickly adjusted their pricing plans [29] Question: Enterprise business margins and ICT growth - The lower margins were attributed to a higher mix of lower-margin ICT business, with ongoing investments in digital services to drive future growth [32][34] Question: 5G network upgrade path and vendor concerns - Management confirmed that 5G plans are progressing without Huawei, ensuring competitive rollout costs [56][57] Question: Cost initiatives and dividend guidance - The company is on track to achieve $500 million in cost savings, with no changes to the dividend guidance of $0.175 per share [73][121]