Singapore Telecommunications' (SGTCF) CEO Chua Sock Koong on Q3 2016 Results - Earnings Call Transcript

Singapore Telecommunications Ltd. (SGTCF) Q3 2016 Results Earnings Conference Call February 12, 2015 10:00 PM ET

Executives

Sin Yang Fong - VP, IR

Chua Sock Koong - Group CEO

Lim Cheng Cheng - Group CFO

Allen Lew - CEO, Consumer Australia

Yuen Kuan Moon - CEO, Consumer Singapore

Bill Chang - CEO, Group Enterprise

Samba Natarajan - CEO, Group Digital Life

Ben White - Acting Head of Marketing and Products, Consumer Australia

Analysts

Arthur Pineda - Citigroup

Prem Jearajasingam - Macquarie Securities

Andrew Levy - Macquarie Securities

Ian Martin - New Street Research

Roshan Raj - Bank of America Merrill Lynch

Srini Rao - Deutsche Bank

Sachin Mittal - DBS Bank

Raymond Tong - Goldman Sachs

Operator

Ladies and gentlemen, welcome to Singtel's FY '16 Q3 results conference call. [Operator Instructions]. Ms Sin, over to you.

Sin Yang Fong

Thank you, Vincent. A warm welcome to all analysts and investors. You are listening in to Singtel's earning conference call for the third quarter ended 31st December, 2015. My name is Sin Yang Fong and let me introduce management on the call. We have Ms. Chua Sock Koong, the CEO.

Chua Sock Koong

Hi, happy New Year everyone.

Sin Yang Fong

Mr. Allen Yew, CEO Consumer Australia; Mr. Yuen Kuan Moon, CEO Consumer Singapore; Mr. Bill Chang, CEO Group Enterprise; Mr. Samba Natarajan, CEO Group Digital Life; Mr. Mark Chong, CEO International; Ms. Lim Cheng Cheng, Group CFO; Ms. Jeann Low, Group Chief Corporate Officer; Mr. Murray King, who is in Singapore with us, who is the CFO Consumer Australia. They are also assisted by other members of the management team, both in Singapore and Australia.

Before we start taking questions, I would like to invite Sock Koong to share some highlights from this set of results.

Chua Sock Koong

Thanks Yang Fong and once again, good morning to everyone and happy Chinese New Year. This morning we reported our results for the quarter and nine months ended 31st December, 2015. Let me just give you some key highlights. For this quarter, we continued to strengthen our core operations and we improved our performance in our digital marketing business. We are committed to provide the best data and entertainment experience by offering a mix of flexible plans and differentiated content. Optus was able to sustain its momentum, growing both revenue and customers.

Our associates are investing heavily in networks and services to drive growth in mobile data usage. In the enterprise space, we strengthened our market leadership and enhanced our capability in cyber security, cloud computing and smart nation solutions. This quarter’s results reflect the first full quarter contributions of Trustwave, comprising $75 million in revenue, but $8 million in net losses. The Group's revenue and EBITDA rose 6%, and 5% in constant currency terms, driven by the growth in mobile data, ICT and digital services. However, the sharp decline of the Australian dollar moderated growth.

Pre-tax profits on the regional mobile associates remain stable. Growth in customers and mobile data usage were offset by higher depreciation and amortization costs on network and spectrum investment. Excluding tax credits in the prior year and the impact of Trustwave, underlying net profit would have increased 4% and 6% in constant currency terms. On a reported basis, underlying net profit fell 2% on weaker currencies. Free cash flows declined 13% reflecting increased working capital to support Optus' customer acquisition and retention, and timing differences in vendor payments.

I also want to highlight that in this quarter currency movements in Australian dollar declined by 8%; Indonesian rupiah, that declined about 4%; that has impacted our performance. The other regional currencies appreciated or remained flat against the Singapore dollar.

So with that, let me hand back to Yang Fong for questions.

Sin Yang Fong

Thank you, Sock Koong. Participants are advised that this call is being recorded for playback and transcription services. We will now invite questions from participants. Our operator will assist you to put through your questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Your first question today comes from the line of Arthur Pineda of Citigroup. Arthur, please go ahead.

Arthur Pineda

Hi, thanks for the call and happy New Year. Two questions from me. Firstly on Trustwave, is it possible to provide any color on the growth momentum? Are you still on track with your earlier expectations of EBITDA neutral by year two, given that $75 million in revenues seems to imply some slowdown? Secondly, with regard to the Singapore business, you previously announced that the 2G network will be shut down by 2017. Is it possible to get any color on the cost implications of this? What are the cost items going to the 2G network as well and would you need to impair any assets? Last question I had with is regard to Australia. The mobile business seems to have slowed partly due to the loss of MVNO contracts. Can you provide any color on the competitive landscape in this space? What part of the slowdown is linked to the wholesale contract loss and what part is maybe linked to overall competition? Thank you.

Chua Sock Koong

Can I get Bill to talk about Trustwave and then Moon can basically talk about the 2G network shutdown and then over to Allen to talk about the mobile competitive landscape. Bill go ahead.

Bill Chang

Happy New Year everyone. So on Trustwave, we've just announced this full quarter, so it's early to give any projections. There is a lot of activities, given the cyber security sort of growing around the world. Basically they have been leveraged to set up key partnerships in Canada, Rogers, with Globe in the Philippines and we're in the midst of setting up more of these. So there is a lot of activity and we can see this activity translating into more investments now, creating the pipeline to move into the markets. As far as the EBITDA sort of projections, it's a $3 million EBITDA contribution for this quarter in Q3. So we said that it would be EBITDA positive in year two onwards, so this is already in Q3, however there is going to be forward investments as we build up all these assets and infrastructures with all these telcos. So we expect the forward investments to shift the EBITDA, but from year two onwards, we know that this that will be something we will move towards the guidance that we have given.

Chua Sock Koong

I think just to be clear, when we announce our results for the full year, then we will provide some formal guidance for various businesses and that will include Trustwave. Moon?

Yuen Kuan Moon

Thank you, good morning everybody and happy New Year. With regards to the 2G shutdown, that is an industry-wide shut down. We are all targeting and planning to shut down by April 2017. If you look at the 2G shutdown benefits, it is not mainly coming from operating expense improvement, but also helps us to get our customers who are now on 2G into 3G who then use more data and consume more data. So that's the revenue side, as well as experience of a better network because the 3G network is much better than the 2G network in terms of data experience. On the cost side, I think the 2G network is actually fully depreciated, so we don’t expect any impairment and the benefit is really on some of the operating expenses, because there are still some standalone 2G sites that we will be then recovering. So it will come from operating expenses.

Chua Sock Koong

Allen?

Allen Lew

Thank you Sock Koong, and good morning everybody. I think Arthur in terms of answering your

question, I'm not sure when you say the mobile business is slowing down which aspect you're referring to, but I think if you look at our results, the only thing that is slowing down is mobile postpaid ARPU which has declined and that is primarily a result of the aggressive competitive offers or the aggressive market that we're facing out there. If you look at the other metrics, if you look at branded postpaid, we've growth 89,000 which is our highest net add quarter for us in Optus' history, prepaid 61,000, also highest net add quarter in Optus' history. If you look at our revenue mobile service revenue growth, excluding DRP, which is basically a handset subsidy that we are giving back in terms of service credits, it's grown 8.2%. So certainly a lot higher than one of our other competitor's first half number. So I think -- I hope that answers your question. Maybe you can be more specific in terms of telling me which part of our business in mobile you think is slowing down and I can answer this in a more direct way.

Arthur Pineda

So looking at the service revenues, when I look at 1Q versus 2Q versus 3Q, from 5% to 3% to 1%, is that mainly because of the DRP?

Allen Lew

Yes. You are looking at the inc-DRP number. When you look at overall mobile service revenue growth, the inc-DRP's a function of DRP going into our base, it's something that we introduced in February 2015, so it's starting to get into our base and that's showing the impact of DRP going into our base and that's why the overall service revenue is growing at a slower rate compared to Q1 and Q2. The other impact which is something that affected incoming, is the impact of the change in terms of one of our roaming partners, major roaming partners, having a different way of accounting for the revenue. But the overall underlying operating metrics for mobile business still remains good, based on those numbers that I quoted you earlier.

Arthur Pineda

Understood, thank you very much.

Operator

Your next question today comes from the line of Prem Jearajasingam from Macquarie. Prem, please go ahead.

Prem Jearajasingam

Hi, just one question from me. With regard to the mobile revenues, I think we've made this point before that roaming revenues are going to slow from here as people shift to OTT. Now given the movements in the third quarter of the financial year, we have seen quite a bit of a pull back. What are the plans to essentially resuscitate this part of the business or is this something that we're happy to let go because it brings down costs? What are the opportunities there for us to drive mobile revenue growth? Because the way I look at it, without new measures, we could essentially be coming to a period of slow to negative mobile revenue growth for the next couple of years. What are your thoughts around that?

Chua Sock Koong

Moon, do you want to take that question?

Yuen Kuan Moon

With regards to roaming revenue as reported in previous quarter, we do expect the voice roaming to continue to decline because of the usage behavior that changes and most people now use more data and less voice. So that trend, we see it both in local as well as when our customers roam overseas. As well as inbound roamers who come to Singapore, we also see customers using less of voice and more on data. So our plan, our strategy, is definitely to drive data usage while our customers roam overseas and in that aspect we have introduced a lot of different roaming packs, an unlimited roaming pack, as well as a 100MB / $10 roaming pack to 100 different countries on a per day basis. So we will want to drive data usage roaming to mitigate the decline in voice roaming and obviously managing our cost on traffic costs of roaming and our interconnect rates, it will be a very important part of managing the entire margins for roaming.

Just to give you a flavor, I think one year ago roaming revenue contributed about 26% of the entire mobile comms revenue for Singapore, for Singtel and now it is actually 23%. So while the revenue contribution from roaming is declining, you still see an overall revenue growth for that entire mobile business. So we're actually mitigating some of the decline in roaming and we see that this change will be gradual and we will be able to drive up data usage, both local and roaming, to mitigate the voice roaming decline.

Prem Jearajasingam

Just as a follow up, from a profitability standpoint, going from 26% of revenue to 23%, has that

changed your profitability on roaming overall?

Yuen Kuan Moon

Our roaming business is still very profitable, both on voice and data. It's just that the magnitude of the decline of voice is higher than the increase in data.

Prem Jearajasingam

Okay, all right. Perfect. Thank you very much, Moon.

Operator

Your next question today comes from the line of Andrew Levy from Macquarie Securities. Andrew, please go ahead.

Andrew Levy

Thank you. Just one question: it looks like the postpaid handset ARPU in Australia, Allen, excluding the DRP was up 4.6%. So I just wondered if you could comment on what's driving it up. Is that existing Optus customers spending more with you and moving to higher base plans or do you think you're adding more customers at the higher end that you're taking from your competitors? I'd just appreciate any color into what's driving that dynamic and maybe how it might play out going forward.

Allen Lew

Can you just repeat the front end of your question again? What did you say that was going up again?

Andrew Levy

Postpaid handset excluding DRP impact on your KPI spreadsheet looks like it's up 4.6% in the quarter.

Allen Lew

Yes. I think the major reason for that increase is primarily because of the acquiring of new higher value customers that are coming onto the Optus overall base. As a result of getting those higher value customers our ARPU is shifting up, is increasing.

Andrew Levy

Excellent. That's a good outcome. Thank you.

Operator

Your next question today comes from the line of Ian Martin from New Street Research. Ian, please go ahead.

Ian Martin

Hi. I just wanted to follow up with Andrew's question, because clearly you're getting very strong growth in 4G mobile subscribers, up 40% for the year and 300-and-something thousand for the quarter. Still got a long way to go there, and I just wonder if you can talk about how that trend is going to play out in the year ahead. You've still got maybe a bit less than half of your subscribers on the 4G network. There still seems to be quite a strong driver of that ARPU trend as those remaining customers move onto 4G and use the network more effectively, and that's obviously got quite a strong operating leverage impact as well. So I wonder if you could talk through how you see that playing out in the year ahead.

Allen Lew

Thanks. I think very clearly for us, 4G is a much better user experience in terms of mobile data. So I think what we will be doing is continuing to make sure that we roll out our 4G network using all the different frequency options that we have and that we look at not just getting people onto 4G but to make sure that people who are on 4G have 700 MHz frequency handsets. So we will continue to make sure that we are migrating these customers across because we can see a big difference in terms of the data that’s used on a customer with a 4G handset with 700 MHz compared to a 3G customer today. So I think we will aggressively make sure that we have a good range of 4G 700 MHz handsets for both customers of ours who are on contracted plans as well as for customers who are on BYO who want to get a better data experience. We will have for them the ability to pay for these handsets by installment as well so that they have a lower entry barrier of getting in to use 4G.

Ian Martin

Allen, would you mind just expanding on that just to talk about the operating leverage? As you move those customers onto the 4G network you get better network utilization. Is that what's driving the EBITDA increases?

Allen Lew

Yes, I think we do get certainly the effect of economies of scale, greater scale in 4G driving down the costs per MB to deliver 4G. But I think in the short term we haven’t quite reached that optimum point yet, so the improvement that you are seeing in EBITDA is primarily coming out of cost savings in our OpEx and basically also the way we are accounting primarily for the handset subsidies that we have out there in the market, moving from -- taking it in the month that we acquire the customer to spreading it out in terms of service credits over the contract period of the customer, something that one of our major competitors used on their financial statements for mobile as well.

Ian Martin

Can I just ask one other question, just relating to the TPG wholesale customers that migrated off net in the quarter? Is there more of that to go in the year ahead?

Allen Lew

We would expect further migrations out of Optus' network from that particular MVNO to impact us in Q4 as well, our last quarter of the year.

Ian Martin

Great. Thanks, Allen.

Operator

Your next question today comes from the line of Roshan Raj from Bank of America Merrill Lynch. Roshan, please go ahead.

Roshan Raj

Hi. Thanks for the opportunity. I have two questions, first on Trustwave. What sort of margins could we expect from it on a steady state scenario? Should it be comparable to the enterprise Group level margin or it could be higher or lower? Some color will be fine. And a related question is when a global telco partners with Trustwave, what is it in Trustwave which is really appealing for these telcos? Do they not see Singtel as a competitor and prefer working with an independent managed security services provider, as in how did they get comfort around this aspect? The second question is you have been very active acquiring content in Australia. What sort of impact do you see this having on your margins on a medium to long-term basis? Thank you.

Chua Sock Koong

Okay. I think Bill will take the Trustwave question and then I'll let Allen talk about content in Australia.

Bill Chang

Thank you, Sock Koong. If you look at the Trustwave business, it is primarily a managed security services business service provider and as such the margins, it's basically something that we'll guide in the coming year, in this new fiscal year. It will be in line with what I see some of these managed services margins are. But we'll provide more details in the coming fiscal year after next quarter. As far as why Trustwave's value proposition with telcos, firstly, Trustwave brings a unique set of capabilities, their IP, and also their managed services capabilities. I think many telcos are looking at security with a very, very high-level interest today, one, because they need to protect the core assets to be a trusted service provider, it's a main driver.

Secondly, to look at this being a huge opportunity of growth in their markets as well because of their access and their networks all require this, their data centers, their IT services, if you have an IT arm, all will require this. And because they reach out to the same enterprise customers they will require these services to be an add-on because they are selling telco and IT services already. So if you look at that, where Trustwave comes in, they've got the unique capabilities that you attach to all these telcos. Obviously the ones that we are reaching out to today are associates and Rogers who are deemed as partners of the Singtel Group. There are a number of them we are talking to in the region as well.

The opportunity of what Trustwave brings, it's not just in-country threat telemetry that they provide but it's also a global threat telemetry that they are able to see as they put more and more of these security operation centers into each of these partnership telcos. So the more we add, the network effect of having global threat telemetry becomes even more valuable for the next telco to come forth. And as they scale, that scale effect will come in. So we are in that whole phase of a forward investment. Obviously owning Trustwave today, there are a lot of things that we are now opening from the telco side to have the opportunity to collaborate and explore with them, innovate with them, that many telcos probably will benefit down the line as they see how telco and security services come together. Thank you.

Chua Sock Koong

Content in Australia, Allen?

Allen Lew

Yes, okay. I think with regard to the impact of content on our margins in Australia, I think right now I can only give you a general answer. We'll give you a more specific one when we give you our guidance going into the next financial year. The bulk of our content cost, actually the big one is actually the Premier League, which hits us only in the next financial year. I think in general, let me just explain to you the rationale why content makes sense for a company like Optus. I think at the end of the day -- we talked a bit earlier about the competitive dynamics in this country and the fact that the competition is very fierce, and today the competition is based purely on price and data allowances. With content we can bring in a new dimension to this competitive dynamic, and obviously you would expect that if I have exclusive content then it would weigh into the overall proposition that we put out there in the market. So if we have EPL as something unique to our core business in mobile, then it would certainly have value and obviously that value of EPL will be measured against the other things that I'm putting out on offer like handset subsidies as well as data allowance. So I think from that general perspective we will be using it as a competitive -- unique competitive weapon as we go out from August of this year onwards. So I hope that answers your question. We'll be more specific in terms of our guidance when we announce our full-year results in May.

Roshan Raj

Okay. Thank you so much.

Operator

Your next question today comes from the line of Srini Rao from Deutsche Bank. Srini, please go

ahead.

Srini Rao

Hi, thank you very much. My first question is on the CapEx. Your CapEx is running probably slightly lower than your full-year guidance. Could you comment on that, should we expect you to meet the full-year guidance of S$3 billion on accrued CapEx which you had suggested at the beginning of this year? That's my first question. The second question is around the Singapore enterprise side which has seen a fairly robust growth, excluding Trustwave, after some quarters. So any color on what's driving that would be useful. Thanks.

Chua Sock Koong

Cheng, do you want to take the CapEx revenue guidance? The CapEx guidance for the year question.

Lim Cheng Cheng

Sure. I think in terms of impacts for our CapEx, we are in progress of the continuing rollout, so some of the CapEx is back-ended into the fourth quarter. But you can see that from this morning's announcement we are still affirming our guidance of S$3 billion for the total Group for the Group CapEx and S$2.3 billion for the cash CapEx.

Chua Sock Koong

Yes. Singapore enterprise?

Bill Chang

Yes. Thanks, Sock Koong. With the Singapore enterprise and largely also the Australian enterprise, the growth is powered by the ICT services and the breakdown has been shared. ICT services is a primary driver of our growth. In the Singapore enterprise segment, in addition to ICT services, the core carriage business we have also gained market share in the Asia-Pacific region, namely IP VPN and domestically held our market share positions, the leadership positions, very well. In addition to ICT, let me give you a bit of color to that. Beyond cyber-security, which is a key growth engine, our growth engines in cloud have also performed well and Safe and Smart Cities on the back of the Smart Nation development is also an exciting time for us that we've landed some key projects in the midst of delivering them. So those are the key drivers of our growth.

Srini Rao

Thanks. This is helpful; I'll come back for more questions.

Operator

Your next question today comes from the line of Sachin Mittal from DBS. Sachin, please go ahead.

Sachin Mittal

A couple of questions, firstly on Singapore where EBITDA margins have dropped sharply sequentially. Is it just seasonality or something else? And again, when I look at the Singapore EBITDA on the enterprise side, consumer side and then digital, when I add them together, I don't come out with Singapore EBITDA of S$526 million. Actually the sum of the parts is bigger than S$526 million, about S$555 million. So is it the right way of looking at things or what am I missing here? That's question number one. Secondly, more importantly do you see any delay in spectrum auction in Singapore, as the original schedule was first quarter 2016. Now that IDA has really re-organized or undergoing reorganization and we hear about the date moving to 3Q. Do you get any signals and what are your thoughts on that? Number three, more on the digital side, what is your end plan with Innov8? Is it some kind of incubator business model and how can you retrieve some of those investments, I mean because some of them will be failure, some of them will be success? The last question is on the big data. What are the key target markets for DataSpark besides government? Is it consumers? Is it businesses? And when will DataSpark contribution be material? Thank you.

Chua Sock Koong

Okay I think the IDA timetable on when they're going to issue the final guidelines for the fourth license, when they're going to do the spectrum auction frankly - I think that you know, it's actually controlled entirely by IDA. We have no further visibility than what you have just mentioned. So sorry, can't help you there. So I'm going to pass you to Moon to talk about the sequential quarter EBITDA margin for the Singapore -- for the consumer business. You're referring to the Group consumer margins, right?

Sachin Mittal

No I'm referring to the Singapore consolidated margins of S$526 million EBTIDA for the whole Singapore business.

Chua Sock Koong

Sorry, can you -- I'm not -- can you be more specific as to whether you're talking about the change in the Group consumer business?

Sachin Mittal

No, I'm talking on the country level EBITDA margins for the Singapore business.

Chua Sock Koong

Sorry?

Sachin Mittal

I'm talking on the country level EBITDA margins for Singapore.

Chua Sock Koong

We don't have a country level EBITDA number. In effect -- you're referring to the MD&A is it? Okay.

Sachin Mittal

That's right yes.

Chua Sock Koong

Okay. Let us sort out which number you're talking about. I think the decline I think is probably from -- let's just sort it out first. I'll get Samba to talk about the Innov8 and the big data initiatives first.

Samba Natarajan

Okay. Samba here. So on Innov8, Innov8 is a corporate venture capital innovation fund and it is -- there's no -- I don't know -- you say there was an end game for it. Its current fund size is the allocation of US$250 million and it has made a number of different investments in areas which allow us to get access to innovation, cutting edge technologies and new growth opportunities. So it's playing its role both in terms of providing us with access to new technologies and investing there as well as bringing some of those technologies to our business units. So as far as Innov8 is concerned, any question on that?

Sachin Mittal

Yes. So with -- question is, will you be absorbing all these companies within Innov8 or will it be something like you’ll be looking at a strategic sale of some of those companies in which you have invested? Because not all of them could be successful, right?

Chua Sock Koong

Oh they are all start up investments.

Samba Natarajan

Yes it's a venture capital fund. We don't own any of these companies 100%. We're making investments along with other investors, VC investors as in early stage startups which receive mostly seed funding, series a and series b type of investments. So you know, I think that's -- the idea is for us to run it like a venture capital fund which has some exits, some companies stay on for a while. So that's -- it’s like any regular corporate venture capital fund.

Sachin Mittal

Okay.

Samba Natarajan

On DataSpark, let me move onto DataSpark, the target customer for this is indeed, the government is one. Many of the enterprises in the region are another one where we can deliver insights to enterprises to help them with things like analysis of footfall traffic, store optimization and other such types of use cases, as well as finding a lot of traction with telcos in the region for things like network optimization, customer life cycle management, high value subscriber management and so on. So actually DataSpark has got a broad enough set of customers across government, enterprises and telcos.

Sachin Mittal

So a key question is in the big data segment, I mean there's an issue with the data collection. So will you be using most of the data which is there on the mobile or will you be scouting for data outside mobile? Because there seems to be a lot of different kind of data which is difficult to collect apparently.

Samba Natarajan

DataSpark's focus at the moment is providing insights based on cellular data, Wi-Fi data and eventually IOT data. So these are data coming off of networks that we have. That's its current focus because that allows us to focus really, you know, where we can provide insights in a very unique way.

Bill Chang

So maybe I can just add on, this is what DataSpark does but Group enterprise has a unit, an IT arm, that leverages what DataSpark does and combines not just the Wi-Fi, cellular data, IOT data, but also with customer and video data to really create some of these customer applications and we've actually deployed this in smart nation projects in a number of fronts.

Sachin Mittal

Okay, understand. Thank you.

Chua Sock Koong

I think on your EBITDA question, I think you are probably referring to the Singapore consumer EBITDA. Because we actually don't provide the country level EBITDA margin. Yes. So maybe -- or maybe I should ask Moon to explain the decline in the consumer EBITDA margin in Singapore.

Yuen Kuan Moon

Sure. I think on the sequential quarter, you see a decline in the EBITDA and margin, it's really primarily because of seasonality. December quarter usually is the highest sales quarter for device re-contracting with major phone launches and when that happens, you see a huge volume of phones being re-contracted and with the subsidy being expensed off immediately in that quarter. So you see that there's a hit on the EBITDA. So it's actually every year you will see that the December quarter is the same, seasonality.

Sachin Mittal

Actually just to guide you, this is on page 61 of MD&A where you publish the Singapore EBITDA. So just to let you know, I am wrestling with that figure on Page 61 of MD&A, S$526 million EBITDA of Singapore.

Chua Sock Koong

Sorry, page what?

Sin Yang Fong

Sachin, it's Yang Fong here. I think what we'll do for you after the call is to help you reconcile the different parts of the businesses back to the overall Singapore margin. I think you’ve pointed out to 26.2% EBITDA margin. Yes that is for the overall Singapore business. The way we have been looking at the numbers internally for analysis, we've obviously cut that into Singapore Consumer, Singapore Enterprise and you will also appreciate that Group Digital Life is also part and parcel of the Singapore business. So let the IR team come back to you following this -- after this call. Would that be okay?

Sachin Mittal

Yes that's fine, thank you.

Operator

Your next question today comes from the line of Raymond Tong from Goldman Sachs. Raymond, please go ahead.

Raymond Tong

Thanks guys. We've just had a couple of questions. Just firstly for Allen, Allen you sort of mentioned that your prepaid sort of net adds growth was the highest in recent history. Can you maybe talk around the drivers of that -- is that seasonal or is that sort of new offers in the marketplace which is driving that? That's question number one. Number two is just on the broadband side on the fixed line side of things, it seems like you have lost a bit of momentum there. I think broadband subs went backwards 2000. Can you talk on whether that's like the competitive environment or -- and also I suppose what's going to be the area of focus for you going forward in the fixed line segment?

Allen Lew

Okay Raymond, I will let Ben White, who is here with me -- Ben is our Acting Head of Marketing and Products and he will explain to you what is happening in prepaid and then I will come back to your question on fixed broadband.

Ben White

Thank you Allen. So Raymond, on our prepaid net adds, yes there is a factor which was seasonality. Typically the lead up to Christmas is an extremely busy time of year for prepaid business across the market. So that's certainly a factor. Yes as well, another factor is certainly the strength of offers that have been in the marketplace. It has been a sort of -- a range of very competitive offers that we've had in market. The introduction of rollover to our plans late last year and then also some additional bonus data offers that were in market around the Christmas period as well.

Allen Lew

Okay I hope that answers your question, Raymond.

Raymond Tong

Yes, that's fine. Yes, thank you.

Allen Lew

With regard to the fixed broadband, it's basically us managing our portfolio to move our customers from the ULL broadband, which is one that is based on the last mile copper that we rent from Telstra to one that we see higher broadband speeds being available, primarily on NBN and on HFC. So it's just managing the portfolio to make sure that we have a product that best meets the needs of our customers and a lot of these are broadband customers on ULL, basically are sitting at very long loop lengths and now that people are using video streaming a lot in the home, that particular network doesn't quite meet the needs of those customers so we are managing that migration and that's why you see that decline in broadband. I think in the longer term - our longer term focus is absolutely to move customers onto NBN and you can see from our results that we're getting a lot of traction there. We've got 17,000 net adds for the quarter and obviously HFC, which is a network that we've already sold to the government is one that we'll continue to manage that base very - in a way that maximizes the yield for our shareholders.

Raymond Tong

Great thanks, Allen. Just a follow up question. I think you sort of talked about content and your plans for using content to differentiate going forward. Can you maybe just give a bit of color on I suppose the usage patterns to-date? I think you've been offering the cricket this summer in Australia and also you had a bit of Netflix in there, you're offering Stan and just any color on I suppose the take-up and how customers are using that and how you think that's contributing to your growth, would be helpful.

Allen Lew

Yes I think if you look at our content consumption behaviors here in this country, I think it's very clear to us that within the entertainment genre, and I put sports as entertainment in a very broad sense, I think clearly the content that drives a lot of data usage on our mobile is very much linked to sport and certainly our experience in Cricket Australia which is a fledgling one -- we only experienced over two months -- clearly indicates that a lot of usage and consumption of this content is moving onto the mobile. We can't disclose more information about the usage patterns because at this stage, we have some commitments in our licensing of that content from Cricket Australia that doesn't allow us to share a lot of the information but I think one of the key things that we are getting out of this relationship that we have with Netflix initially and Cricket Australia is that you bundle the right content with your broadband products, you certainly are able to win over a lot of customers to your broadband service, because it's more than just talking about how much cheaper it is. It's talking also about what interesting content I get to watch as a result of subscribing onto Optus' broadband service.

Raymond Tong

Thanks very much, Allen.

Sin Yang Fong

Operator, do we have any more questions on the line?

Operator

No, we have no further questions on the line at this time.

Sin Yang Fong

Okay, thank you very much. So we will stop the call here and for callers who after thinking through and they still have questions about our results, please contact us, the IR team. So a transcript of today's call will be posted onto our website by next Monday. We thank you for your interest in our results. On behalf of everyone here in Singtel, thank you. Goodbye.

Operator

Ladies and gentlemen, that does conclude the conference for today. We thank you for your participation. You may now disconnect.

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