Why SingTel shouldn't be too happy with 7% profits gain

Single-digit drop in earnings feared.

According to OCBC Investment Research, SingTel's reported net profit though climbed 7.0% YoY and 16.4% QoQ to S$1011.0m, boosted by stronger EBITDA margins and higher associate contributions.

Here's more:

But going forward, the group’s outlook remains somewhat muted, citing the continued weakness in the AUD. SingTel now expects revenue from Group Consumer to decline by high single-digit level, with lower revenues from Optus, and EBITDA to decline by low single-digit level (versus single-digit growth previously).

Still, it expects Mobile Communications revenue from Singapore to grow by low single-digit level; Australia’s mobile service revenue to decline by mid single-digit level. Group Enterprise revenue should remain stable; but EBITDA to see low single-digit decline (versus stable previously).

Its Group Digital Life revenue should grow at least 50% on an organic basis; but it will continue to see startup losses. Capex will also increase to S$2.5b to support LTE coverage expansion; invest up to S$2b for digital business over the next three years.

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