Singtel Warns Of Inflation While Airtel Turnaround Buoys Q1 Profit
Analysts pointed to a boost to profit from roaming revenue amid easing COVID-19 curbs in Singapore, and momentum in Australian unit Optus
Singapore Telecommunications Ltd (Singtel) on Wednesday warned of a challenging operating environment due to rising inflation and interest rates after posting a 41 per cent jump in June quarter profit.
Companies around the world are facing pressure from rising labour and fuel costs, prompting them to take a number of belt-tightening steps to avoid a hit to their profit margins.
“We will need to stay nimble and contend with these realities should they put further pressure on our costs and bottomlines,” Chief Executive Yuen Kuan Moon said.
The southeast Asia’s largest telecom firm, which is in the midst of a strategic reset, said net profit for the first quarter was S$628 million ($450.15 million), against S$445 million last year.
Analysts pointed to a boost to profit from roaming revenue amid easing COVID-19 curbs in Singapore, and momentum in Australian unit Optus.
“There are uncertainties, given the current macroeconomic challenges … but highlights around the recovery in international travels as borders reopen is very encouraging,” NewStreet Research analysts wrote in a note.
“The improving underlying trends in the core and recovery in roaming bode well for net income to continue to improve in the next 2-3 years.”
Singtel shares, which have risen over 12 per cent this year, were 0.8 per cent lower on Wednesday, with the broader benchmark stock index falling 0.4 per cent.
The net profit included an additional gain from the divestment of a 70 per cent stake in its Australian tower network for A$1.9 billion. The proceeds of which, it had said, would be used to fund its 5G rollout.
On an underlying basis, net profit rose 10.7 per cent to S$499 million.
The jump in profit was also fuelled by partly owned Bharti Airtel’s resilient turnaround, which earlier this month, reported a 22 per cent jump in quarterly revenue.
Singtel had in May forecast a stronger fiscal 2023 led by a strong uptake for its 5G networks.
(Reuters)
