SingTel Sees Faster Sales Growth as Optus Reverses User Slump

Updated on

Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, said sales growth from its core business will accelerate after its Australian unit Optus added customers at the fastest pace in three years.

Revenue from businesses that include Optus and its Singapore phone unit will rise at a “mid single digit” pace in the year started April 1, the company known as SingTel said Thursday. That compares to 1.2 percent growth last fiscal year.

SingTel is using its cash to expand into digital services and cyber-security as growth in its home market of Singapore slows and investments in emerging-market carriers, including India’s Bharti Airtel Ltd., mature. Optus, whose mobile customer numbers have dropped on an annual basis for six consecutive quarters amid competition from Telstra Corp., added 42,000 customers in the fourth quarter to March 31.

“They are trying to transform themselves from a pure carrier into something that is more value-added,” Carey Wong, an analyst at Oversea-Chinese Banking Corp. in Singapore, said before the result. “They still hold a pretty dominant position in Singapore.”

SingTel shares closed at S$4.36 in the city-state Wednesday, capping a 12 percent rise this year that’s outpaced the 2.8 percent gain in the Straits Times index.

The company said last year’s net income rose 3.5 percent to S$3.78 billion ($2.9 billion). That compares with the S$3.8 billion average of 20 analyst estimates compiled by Bloomberg.

Optus Revival

In the fourth quarter, SingTel’s group sales rose 5.1 percent from a year earlier and net income gained 4.5 percent to S$939 million.

“We have taken bold measures in the face of industry challenges,” Chua Sock Koong, group Chief Executive Officer, said in a statement Thursday. “Our unique telco assets put us in the right place to seize opportunities.”

Optus’s addition of customers comes after it had lost mobile market share in recent years, falling from 33 percent of customers to 30 percent in the four years to June 2014 at a time when Telstra increased its share from 41 percent to 51 percent.

Chua is hoping to plow profits from phone operations at home and Australia into new digital initiatives such as video, marketing and data. In April, it announced its biggest acquisition since the 2001 takeover of Australia’s Optus by spending $810 million to buy cyber-security business Trustwave Holdings Inc.

That’s proving costly. Losses at the Digital Life unit which comprises most of SingTel’s services businesses widened to S$216 million last year, from S$170 million in the 2014 fiscal year. They’ll narrow to a range of S$150 million to S$180 million in the 2016 fiscal year, SingTel forecast Thursday.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE