Singtel’s 3QFY20 operating revenue fell 5.4% YoY to S$4.4b (or -2.5% in constant currency terms), on the back of lower equipment sales, weak business sentiment and spending, continued price erosion in carriage services and stiffer market competition.

Regional Associates’ PBT rose 15.0% YoY (or 9% in constant currency terms) to S$393m, with lower pre-tax losses from Airtel as well as stronger performance from Globe, though Telkomsel saw lower contribution this quarter.

Underlying profit fell 18.9% YoY to S$551.2m, representing 19.6% of our full-year forecast. FY20 guidance has also been updated, with EBITDA now expected to decrease by low single digit (vs. stable previously), FCF (excluding spectrum payments and dividends from associates) to be ~S$2.3b (vs. S$2.4b previously), while dividends from regional associates to be ~S$1.3b (vs. S$1.2b previously).

We maintain our BUY rating but place our FV of S$3.53 under review for now.

Source: OCBC Research - 13 Feb 2020