Singapore Telecommunications' EPS Tumble: A Deep Dive into 2Q 2025 Earnings
Saturday, Nov 16, 2024 8:23 pm ET
6min read Singapore Telecommunications (SGX:Z74), Asia's leading communications company, reported a significant decline in earnings per share (EPS) for the second quarter of 2025. The company's EPS dropped to S$0.033, a stark contrast to the S$0.10 recorded in the same period last year. This article delves into the factors contributing to this decline and examines the broader market trends affecting the company.
Revenue growth has been sluggish for Singapore Telecommunications, with a decline of 3.8% per year compared to the industry's 14.2% annual earnings growth. This slower revenue growth, coupled with a 67% drop in net income, has significantly impacted EPS. The company's profit margin also plummeted from 47% in 2Q 2024 to 15% in 2Q 2025, indicating a substantial decrease in earnings power.
The decline in profit margins can be attributed to a combination of factors, including increased competition, regulatory pressures, and rising costs. Singapore Telecommunications' capital expenditure (CapEx) grew by 15% year-over-year in 2Q 2025, indicating higher investment in infrastructure and technology. However, this increased spending did not translate into proportional revenue growth, as revenue only increased by 1.1% during the same period. Additionally, the company's operational efficiency decreased, as evidenced by the significant drop in profit margins.
Singapore Telecommunications' dividend policy has also played a role in its EPS trajectory. In 2024, the company announced a dividend of S$0.089, which was an increase from the previous year's S$0.079. However, this increase did not offset the substantial decline in EPS in 2Q 2025. The company's EPS has been volatile, with a 251.61% increase from 2021 to 2022, followed by a 11.93% increase from 2022 to 2023, and a 63.83% decline from 2023 to 2024. The company's dividend policy has contributed to its EPS, but the recent decline in EPS suggests that other factors, such as revenue growth and operating expenses, may be more significant in determining the company's financial performance.
In comparison to other Asian telecom companies, Singapore Telecommunications' earnings growth rate of 7.4% lags behind the industry average of 14.2%. Nippon Telegraph And Telephone (NTTYY) and Chunghwa Telecom (CHT) have higher growth rates, with 11.5% and 10.8% respectively. This suggests that Singapore Telecommunications may be facing unique challenges in maintaining earnings growth.
The broader market, such as the Utilities Diversified Communication Services sector, has been performing better in terms of earnings and revenue growth compared to Singapore Telecommunications. According to Simply Wall St, the sector's earnings growth is forecasted to average 3.9% p.a. over the next three years, compared to the company's projected 2.7% p.a. revenue growth. Revenue for SGX:Z74 increased by 1.1% to S$3.58b, but net income plummeted by 67% to S$541.6m, indicating a substantial decline in profit margins.
In conclusion, Singapore Telecommunications' EPS decline in the second quarter of 2025 is a result of sluggish revenue growth, decreased profit margins, and a challenging operating environment. While the company's dividend policy has contributed to its EPS, other factors, such as revenue growth and operating expenses, appear to be more significant in determining its financial performance. As the company navigates these challenges, investors should closely monitor its earnings trajectory and potential catalysts for a turnaround.
Revenue growth has been sluggish for Singapore Telecommunications, with a decline of 3.8% per year compared to the industry's 14.2% annual earnings growth. This slower revenue growth, coupled with a 67% drop in net income, has significantly impacted EPS. The company's profit margin also plummeted from 47% in 2Q 2024 to 15% in 2Q 2025, indicating a substantial decrease in earnings power.
The decline in profit margins can be attributed to a combination of factors, including increased competition, regulatory pressures, and rising costs. Singapore Telecommunications' capital expenditure (CapEx) grew by 15% year-over-year in 2Q 2025, indicating higher investment in infrastructure and technology. However, this increased spending did not translate into proportional revenue growth, as revenue only increased by 1.1% during the same period. Additionally, the company's operational efficiency decreased, as evidenced by the significant drop in profit margins.
Singapore Telecommunications' dividend policy has also played a role in its EPS trajectory. In 2024, the company announced a dividend of S$0.089, which was an increase from the previous year's S$0.079. However, this increase did not offset the substantial decline in EPS in 2Q 2025. The company's EPS has been volatile, with a 251.61% increase from 2021 to 2022, followed by a 11.93% increase from 2022 to 2023, and a 63.83% decline from 2023 to 2024. The company's dividend policy has contributed to its EPS, but the recent decline in EPS suggests that other factors, such as revenue growth and operating expenses, may be more significant in determining the company's financial performance.
In comparison to other Asian telecom companies, Singapore Telecommunications' earnings growth rate of 7.4% lags behind the industry average of 14.2%. Nippon Telegraph And Telephone (NTTYY) and Chunghwa Telecom (CHT) have higher growth rates, with 11.5% and 10.8% respectively. This suggests that Singapore Telecommunications may be facing unique challenges in maintaining earnings growth.
The broader market, such as the Utilities Diversified Communication Services sector, has been performing better in terms of earnings and revenue growth compared to Singapore Telecommunications. According to Simply Wall St, the sector's earnings growth is forecasted to average 3.9% p.a. over the next three years, compared to the company's projected 2.7% p.a. revenue growth. Revenue for SGX:Z74 increased by 1.1% to S$3.58b, but net income plummeted by 67% to S$541.6m, indicating a substantial decline in profit margins.
In conclusion, Singapore Telecommunications' EPS decline in the second quarter of 2025 is a result of sluggish revenue growth, decreased profit margins, and a challenging operating environment. While the company's dividend policy has contributed to its EPS, other factors, such as revenue growth and operating expenses, appear to be more significant in determining its financial performance. As the company navigates these challenges, investors should closely monitor its earnings trajectory and potential catalysts for a turnaround.
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