SingTel CEO Warns of More Jobs Cuts at Optus Unit
Singapore Telecommunications (SingTel) isn't ruling out additional job cuts at its Australian operation Optus in an effort to drive down costs after slashing headcount by almost 10 percent over the last nine months.
Getting the cost structure right is "very important" because growth has slowed down in the Australian mobile market and competition has been intense, CEO Chua Sock Koong told CNBC in an interview Thursday.
"Unfortunately, we're in the business where prices only go down, not up, so we would need to have a cost structure that's appropriate to our operations" in Australia, Chua said after announcing third-quarter results which showed profit at southeast Asia's largest telecommunications firm fell 8.3 percent, more sharply than market forecasts.
(Read more: SingTel Third Quarter Net Profit Falls 8.3%)
"So we would obviously look at how we would do things differently, how we could do things more efficiently and as a result if we could free out headcount, we would do that," she added.
SingTel's lower profit was mainly due to exceptional charges of S$67 million ($54 million) for the restructuring of Optus' workforce and accelerated depreciation charges at Philippine associate Globe Telecom's network modernization. However, Optus reported EBITDA growth of 3 percent during the quarter, despite a 6 percent decline in revenue.
Optus has shed 305 staff over the three months to 31 December, 2012.
The telco has axed a total 962 staff, or 9.9 per cent of its workforce, over the last 12 months. Consequently, staff costs fell 3.6 per cent.
Improving India Business
SingTel expects an improvement in the firm's Indian business - Bharti Airtel - after the latter saw a 72 percent year-on-year drop in quarterly profit, way below market expectations. SingTel owns about a third of Bharti, which is India's largest mobile phone operator.
(Read more: India's Bharti Airtel Profit Sinks, Misses Estimates)
Chua said a changing regulatory environment in India, which will see a number of competitors lose their operating licenses in March, should bode well for their business.
"With the cancellations of the licenses, those operators stopping their operations in March this year, we would expect a better market structure," Chua said.
Despite the poor performance of Bharti, which has suffered 12th consecutive quarters of falling profit growth due to foreign exchange losses, higher taxes and financing costs, Chua said SingTel has no plans to reduce their stake in the telecom.
"We see Bharti and (the) Indian market as still being very attractive, obviously it has gone through some very challenging periods," Chua said. "There have also been improvements in the pricing structure in India and we would expect the impact of that to come through over the next few quarters."
-By CNBC's Sri Jegarajah and Rajeshni Naidu-Ghelani.