Singtel’s 3QFY17 operating revenue fell 1.5% YoY to S$4.4b, impacted by its Australia consumer business (-9.8%) on decline in mobile termination rates, but partly offset by its stronger Singapore consumer business (+3.5%) and higher advertising revenue from its Digital Life business (+21.6%). 3QFY17 EBITDA was stable at S$1.2b but would have declined 2.2% in constant currency terms with heightened competition in Australia.

Even after including 3QFY17’s exceptional loss of S$22m, NPAT grew 1.8% to S$973m while underlying NPAT rose 4.2% to S$994m driven mainly by a 6.1% growth in underlying profit contributions from its associates.

For 9MFY17, operating revenue fell 3.6% YoY to S$12.4b due to rates change in Australia. EBITDA declined 1.6% YoY to S$3.7b mainly due to intense competition in Australia, but is within our expectations as it met 75.2% of our FY17 forecast. Underlying net profit grew 3.6% YoY to S$2.9b on stronger contributions from associates.

Looking ahead, Singtel expects FY17 consolidated revenue to decline by low single digit while EBITDA should be stable. Capex is expected to remain at S$2.4b on cash basis and group free cashflow is expected to be ~S$1.5b. Pending more details from the analyst briefing later, reiterate BUY but with an unchanged S$4.27 FV for now.

Source: OCBC Research - 9 Feb 2017