SINGAPORE (Nov 18): Singapore Telecommunications recorded its first-ever quarterly loss — of $668 million — in 2QFY2020 as it made provisions for a huge fine levied on the Indian mobile industry by its regulator.

Bharti Airtel, Singtel’s associate in India, was slapped with a fine of US$3 billion ($5.5 billion), slightly less than Vodafone’s Indian unit’s fine of US$4 billion. The fine on the telcos was for their long-running dispute with the Department of Telecommunications regulator over the definition of “adjusted gross revenue”.

Singtel’s share of the fine slapped on Airtel amounts to some $1.9 billion. Without this provision, the telco’s earnings would have improved 3% y-o-y to $737 million, said Chua Sock Koong, Singtel’s group CEO, at a late-evening results briefing on Nov 14. For more than a decade, Singtel had held its earnings briefing before the market opened.

Chua said the judgement by India’s Supreme Court was a surprise. The case had dragged on for 14 years, with many rounds of hearings. Each time, the courts found in favour of the operators — until this most recent ruling on Oct 24. “The final outcome was different from all the previous outcomes,” she said.

Airtel will continue to make representations to the Indian government for relief and seek further clarifications on the definition of “adjusted gross revenue” for the Indian telco industry, she added.

The court ruling aside, Singtel’s business in India has been a drag in recent years as price competition hurt margins. In March, Singtel, itself majority-owned by the Singapore government, sought help from sovereign wealth fund GIC to fund a US$3.5 billion rights issue at Bharti or risk the dilution of its stake. Back then, Singel and GIC paid US$525 million and US$700 million respectively. It is yet unclear whether further capital raising is required.

For now, Singtel is guiding that it will remain profitable in FY2020. To signal its healthy cash flow, the company plans to keep its interim dividend payout of 6.8 cents a share. It is also guiding for a total full-year payout of 17.5 cents — the same as last year. “There is a difference between recurring performance and an exceptional item. In this case, it is a provision we made for a court decision,” said Chua.

For the three months to Sept 30, Singtel reported a 3% y-o-y dip in revenue to $4.15 billion, as its consumer business in the two main markets of Singapore and Australia remain resilient in the face of tough competition. In constant currency terms, the top line was unchanged.

Singapore is poised to offer next-gene­ration 5G licences for application soon. Along with the hefty licensing charges, operators need to cough up significant capital expenditure as well. With all three main mobile operators under financial strain, there has been speculation that they are keen to share the same network. At the results briefing, Singtel’s executives would not give more clarity as to whether it would go ahead on its own or with partners. Similarly, Chua is vague about whether it is pursuing a digital banking licence. She said many suitors have made overtures to Singtel. <strong>Oversea-Chinese Banking Corp</strong> is reportedly keen on bidding for a digital banking licence with the company.

Singtel is also brushing aside TPG’s entry as the fourth telco in Singapore. In a bid to quickly win market share, TPG has offered free trial services. “Whenever they offer a commercial service beyond the free trial, it is a good sign for the industry, because then you know exactly what they are offering to the end-user, and how much the end-user is willing to pay for that service and network quality. Today, it is hard to gauge when everything is free,” says Yuen Kuan Moon, Singtel CEO for its Singapore consumer unit, at the same briefing.

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