The regional associates continued to win new customers and capture strong data growth, reaping the benefits of sustained investments in network and spectrum. However, with weaker earnings from Airtel and Telkomsel and a reduction in economic interest in NetLink NBN Trust partly offset by higher contribution from Intouch, the associates’ pre-tax and post-tax underlying profit contributions fell 15% and 11% respectively.
The Group’s combined mobile customer base reached 706 million, an increase of 11% or 68 million from a year ago. Telkomsel registered 14% increase in its customer base to 193 million, including 109 million of data customers as at end of March 2018. Airtel’s total mobile customer base covering India, Sri Lanka and across Africa, reached 396 million as at 31 March 2018, an increase of 11% from a year ago.
Telkomsel delivered 5% increase in revenue with growth in data and digital services amid heightened price competition. Data and digital services revenue rose 29% on higher data usage, but traditional voice and SMS revenues declined with increased popularity of OTT applications and higher smartphone penetration. EBITDA grew 2% despite higher network expenses from accelerated deployment of 4G network and increased frequency fees for 2300 MHz spectrum acquired in October 2017. With higher depreciation charges from network investments and a weaker Indonesian Rupiah, Telkomsel’s post-tax contribution declined 3.7%.
AIS’ service revenue (excluding interconnect and equipment rental) grew 5% on increases in data and fixed broadband revenues lifted by higher usage and improved 4G network coverage. EBITDA grew 11% on the back of service revenue growth, lower marketing spend with reduced subsidy costs and lower regulatory fees on reduction in licence fee rate. This was partly offset by higher costs from network expansion and payments to TOT Public Company Limited for the lease of 2100 MHz spectrum, towers, equipment and facilities. With higher depreciation and spectrum amortisation charges and a stronger Thai Baht, AIS’ post-tax contribution rose 4.9%.
Globe’s service revenue grew 7% driven by growth in mobile data related services as demand for internet and data connectivity continued to increase. EBITDA rose 11% despite higher network costs to support the growing customer base and network expansion. The growth was offset by higher depreciation charges and finance costs from its data network investments. Singtel also recorded its share of Globe’s one-off gain of S$22 million from the increase in fair value of its retained equity interest in its associate (previously a wholly-owned subsidiary). With a weaker Philippine Peso, Globe’s post-tax contribution declined 2.7%.
Singtel acquired 21% equity interest in Intouch (1) in November 2016. The Group’s share of Intouch’s post-tax profit was S$106 million. After including amortisation of acquired intangibles of S$21 million, Intouch’s post-tax contribution was S$86 million.
In India, Airtel’s results were adversely impacted by intense competition with aggressive pricing by a new player and further aggravated by mandated cuts in mobile termination rates, despite recording strong customer additions and data usage growth. Consequently, Airtel’s revenue in India fell 13% led by a drop in mobile revenue partly mitigated by growth in other segments. EBITDA correspondingly declined 22%. In Africa, operating revenue was stable in constant US Dollar terms and would have increased 5% across the 14 countries if excluding the divested operations, led by strong growth in data and Airtel Money services. EBITDA was up a significant 46% with continued strong cost control initiatives and efficiency gains, as well as improved margins.
In reported Indian Rupee terms, Airtel’s consolidated revenue and EBITDA declined 12% and 15% respectively. With higher depreciation charges from network assets and increased spectrum amortisation and financing costs in India, Airtel’s post-tax contribution declined 62%. Including the share of Bharti Telecom Limited’s (BTL) net loss of S$18 million which comprised mainly net finance expense, the Group’s share of post-tax contribution from Airtel and BTL fell 69%.
In April 2018, Airtel announced the merger of Indus Towers and Bharti Infratel to create the largest tower company in the world outside of China, subject to regulatory and shareholder approvals.