Management Discussion and Analysis
Notes: (1) Assuming constant exchange rates for the Australian Dollar, United States Dollar and/or regional currencies (Indian Rupee, Indonesian Rupiah, Philippine Peso and Thai Baht) from the previous year ended 31 March 2018 (FY2018). (2) Underlying net profit refers to net profit before exceptional items.
The Group has executed well on its strategy amid challenging industry, business and economic conditions. The fundamentals of the core businesses remained strong and the Group gained market share in mobile across both Singapore and Australia led by product innovations, content and services. Amobee and Trustwave continued to scale and deepen their capabilities, while the regional associates further monetised the growth in data as smartphone adoption increased. Leveraging on the Group’s strengths and customer base, Singtel continued to build digital ecosystems in payments, gaming and esports. 

The Group has executed well on its strategy amid challenging industry, business and economic conditions. The fundamentals of the core businesses remained strong and the Group gained market share in mobile across both Singapore and Australia led by product innovations, content and services. Amobee and Trustwave continued to scale and deepen their capabilities, while the regional associates further monetised the growth in data as smartphone adoption increased. Leveraging on the Group’s strengths and customer base, Singtel continued to build digital ecosystems in payments, gaming and esports.
In constant currency terms, operating revenue grew 3.7% driven by increases in ICT, digital services and equipment sales. However, EBITDA was down 3.9% mainly due to lower legacy carriage services especially voice, and price erosion. With 6% depreciation in the Australian Dollar, operating revenue was stable while EBITDA declined 7.1%.
Depreciation and amortisation charges fell 1.2% but rose 2.7% in constant currency terms, on increased investments in mobile infrastructure network, spectrum and project related capital spending.  Depreciation and amortisation charges fell 1.2% but rose 2.7% in constant currency terms, on increased investments in mobile infrastructure network, spectrum and project related capital spending.
Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms. 

Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms.  Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms.
In the emerging markets, the regional associates continued to invest in network, spectrum and content to drive data usage. Pre-tax contributions from the associates declined a steep 38% mainly due to Airtel and Telkomsel, the Group’s two largest regional associates. Airtel recorded operating losses on sustained pricing pressures in the Indian mobile market. Telkomsel’s earnings fell on lower revenue due to fierce competition in Indonesia in the earlier part of the financial year when the mandatory SIM card registration exercise took effect. Including associates’ contributions, the Group’s EBIT was S$4.01 billion, down 24% from last year.
Net finance expense was up 2.9% on lower dividend income from the Southern Cross consortium and higher interest expense from increased borrowings.
With lower contributions from the associates, underlying net profit declined by 21%. Exceptional gain was lower as FY 2018 was boosted by a S$2.03 billion of gain on the divestment of units in NetLink Trust. Consequently, the Group recorded a net profit of S$3.10 billion, down 44% from last year. 

With lower contributions from the associates, underlying net profit declined by 21%. Exceptional gain was lower as FY 2018 was boosted by a S$2.03 billion of gain on the divestment of units in NetLink Trust. Consequently, the Group recorded a net profit of S$3.10 billion, down 44% from last year.
The Group has successfully diversified its earnings base through its expansion and investments in overseas markets. On a proportionate basis if the associates are consolidated line-byline, operations outside Singapore accounted for three-quarters of both the Group’s proportionate revenue and EBITDA.
The Group’s financial position and cash flow generation remained strong as at 31 March 2019. Free cash flow for the year was up 1.2% to S$3.65 billion.
Table:
 | Financial Year ended 31 March |  |  | 
 | 2019 | 2018 | Change | Change in constant currency (1)
 | (S$ million) | (S$ million) | (%) | (%)
Operating revenue | 17,372 | 17,268 | 0.6 | 3.7
EBITDA | 4,692 | 5,051 | -7.1 | -3.9
EBITDA margin | 27.0% | 29.2% |  | 
Share of associates’ pre-tax proﬁts | 1,536 | 2,461 | -37.6 | -36.2
EBIT | 4,006 | 5,261 | -23.9 | -21.8
(exclude share of associates’ pre-tax proﬁts) | 2,470 | 2,801 | -11.8 | -9.2
Net ﬁnance expense | (355) | (345) | 2.9 | 6.2
Taxation | (850) | (1,344) | -36.8 | -35.8
Underlying net proﬁt (2) | 2,825 | 3,593 | -21.4 | -19.1
Underlying earnings per share (S cents) (2) | 17.3 | 22.0 | -21.4 | -19.1
Exceptional items (post-tax) | 270 | 1,880 | -85.7 | -85.2
Net proﬁt | 3,095 | 5,473 | -43.5 | -41.8
Basic earnings per share (S cents) | 19.0 | 33.5 | -43.5 | -41.8
Share of associates’ post-tax proﬁts | 1,383 | 1,823 | -24.1 | -21.8


Question: Who are the group's two largest regional associates?
Answer: Airtel, Telkomsel