Singtel share price: what’s the latest ahead of Q3 earnings?

Singtel’s Indian and Thai subsidiaries were recently hit by hefty multi-billion-dollar fines. How would this affect its Q3 earnings?

When is Singtel’s Q3 FY2020 results date?

Singapore Telecommunications Limited (Singtel) will be releasing its Q3 FY2020 financial results for the nine months ended 31 December 2019 next Thursday, 13 February.

Ahead of the quarterly earnings, here are the latest market updates regarding Singapore’s largest telco that investors should probably be aware of.

Singtel’s Q3 results preview

Net loss of S$668 million in Q2 FY2020 due to Indian fines

The third quarter is especially crucial for the group this year, after it posted a net loss of S$668 million in Q2, and a net loss of S$127 million for the half year.

The company said this was largely due to provisions amounting to US$1.93 billion that it attributed to its Indian subsidiary Bharti Airtel, after the Indian government fined local mobile operators over the industry’s definition of ‘adjusted gross revenue’.

However, excluding Bharti Airtel, net profit grew 4% for the quarter and was stable for the half year.

Group operating revenue fell 3% year-on-year in the second quarter to US$4.15 billion, mostly due to the enterprise business recording a decline in revenue on the back of lower business spending, carriage erosion, and market headwinds in Australia.

Right now, however, things are not looking so good for Bharti Airtel, as the Supreme Court of India had on 16 January rejected the company’s appeal of the October court ruling. This meant that Bharti Airtel was still liable to pay an estimated US$5 billion fine to the government.

Furthermore, Singtel’s Thai subsidiary Advanced Info Service, was also ordered on 30 January by an arbitrational tribunal to pay S$1.37 billion to rival TOT Public company, after the latter filed a lawsuit claiming for loss of benefit stemming from unlawful contract amendments in a mobile service agreement between both parties dating back to 2001.

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Singtel’s share price performance in 2019

Singtel’s share price increased a solid 16% in 2019.

Ironically, the telco’s stocks were a beneficiary of the global trade uncertainty from earlier in the year, rather than an improved fiscal performance, as noted by DBS analyst Sachin Mittal. He said shares had been ‘driven by the market’s search for yield and defensive stocks in the wake of global economic and trade woes’.

Share price however did take a big tumble in October, after it was reported that the blue-chip firm was planning to cut its dividend rate for the first time in 20 years to between 13 to 15 cents a share.

Prices then recovered slightly, before another small drop in mid-November as a result of the Q2 net loss.

Following that, share price managed to inch back up close to its 52-week peak of S$3.40 per share, thanks to a partnership with internet company Grab announced in December. Both companies had combined forces to apply for a digital banking licence (with Singtel taking a 40% stake), the first of its kind in Singapore.

Share price of Singtel, which has a market capitalisation of S$54.87 billion, has fallen 1.18% since the start of the year. It is currently trading at S$3.36 per share.

What Singtel CEO said about Q2

Regarding the results, Chua Sock Koong, Singtel Group CEO, said: ‘The weak global economic environment has affected the industry, although on a positive note, our diversified earnings base and our cost management have lifted our performance.

‘We remain focused on delivering better customer experience and deepening customer engagement. While we expect current challenging conditions to continue into 2020, we will invest to strengthen our market position, enhance our core networks and build strategic capabilities to capture growth, and be 5G-ready.’

On Airtel, Chua said the company was able make positive strides despite the recent industry consolidation, as it gained market share and increased mobile service revenue for a third straight quarter.

Stay tuned to for more updates on Singtel’s Q3 earnings in the coming weeks.

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