Singtel’s 1QFY19 results were slightly under expectations. Operating revenue was down 0.5% YoY to S$4.1b, though up 2% YoY in constant currency terms.

The group saw strong customer growth and higher equipment sales in Australia, though enterprise revenue was down 3% YoY due to the completion of a major infrastructure project in the preceding year.

The group saw EBITDA drop 2.7% YoY (stable in constant currency terms) to S$1.2b, which formed 23.9% of our full-year forecast.

Underlying profit fell 19.3% YoY to S$733.5m, on the back of softer results from Airtel and Telkomsel, reduced economic interest in NetLink NBN Trust, an increase in withholding taxes and adverse currency movements.

We note that while Telkomsel’s earnings were hit by intense price competition especially during the mandatory registration of prepaid SIM cards, but this exercise has since been completed and the pricing situation has improved.

We maintain our BUY rating, but place our FV of S$4.10 under review pending an analyst briefing.

Source: OCBC Research - 8 Aug 2018