Shares & Derivatives
Can Telcos Stop the Decline in Profitability?
By (The) Boring Investor  •  February 12, 2017
All 3 telcos have reported their financial results for the quarter ending Dec 2016. Both M1 and Starhub reported a significant drop in net profit of 27.1% and 33.2% respectively while Singtel reported a slight 1.8% rise in net profit. Starhub even dropped a bombshell by announcing that dividends for 2017 will be cut by 20% to 16 cents. Can telcos stop the decline in profits, or will profits continue to decline? As M1 is closest to a pure mobile telco company, this analysis is carried out using M1's results.   Fig. 1 below shows the overall service revenue and costs excluding handset sales, which are very volatile. As shown below, the service revenue is fairly stable, hovering around $200M per quarter in FY2015 and FY2016. Service costs, however, are on the rise, especially in the last 2 quarters, leading to a decline in quarterly profits......
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By (The) Boring Investor
nvestor, Engineer, Photographer, Blogger, Friend and Son.
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