Poor profits send SingTel stocks down
BruneiTimes writes…SINGAPORE Telecommuni-cations Ltd. (SingTel), Southeast Asia’s top phone firm, posted a weak 9.6 per cent rise in quarterly profit due to slower-than-expected Asian mobile growth, sending its stock down two per cent.
SingTel yesterday said that it would stick to previously issued guidance for flat full-year operating revenue and earnings before interest, tax, depreciation and amortisation (Ebitda).
“The results are below our expectations,” said DBS Vickers Securities analyst Sachin Mittal.
“Ebitda margins for the domestic operations were hit by increased mobile subscriber acquisition and retention costs, while contributions from all the associates _ except for Bharti _ declined from the previous quarter,” he said, adding that its Australian unit, Optus, had performed in line.
SingTel owns nearly 31 per cent of India’s Bharti Airtel, the top operator in the world’s fastest growing mobile services market, and is keen to increase its stake in the country which has been adding about six million new customers a month.
Britain’s Sunday Telegraph reported SingTel had held talks with Vodafone about possibly buying its 10 per cent stake in Bharti if the British firm wins an auction for Hutchison Essar, India’s fourth biggest mobile operator.
“Whether Vodafone’s stake is open for sale is still very unclear. It is really premature for us to comment on any discussions (with Vodafone) at this stage,” Chief Financial Officer Chua Sock Koong told reporters.
Shares in SingTel, the city-state’s largest listed firm, sank as much as 2.3 per cent to S$3.42 in morning trade in Singapore after its results. Its Sydney-listed stock fell as much as four per cent to A$2.86. SingTel made underlying net profit before goodwill and exceptional items of S$850 million (US$555 million) in the fiscal third quarter to the end of December against a restated S$775 million a year ago.
The result was below an average net profit forecast of S$926.8 million from a Reuters survey of four analysts.
Attributable net profit was S$994 million, up 12.6 per cent from a restated S$882 million the year before, boosted by a one-time gain of S$144 million from the sale of a property.
Battling heavy competition at home, where the mobile phone penetration rate has reached 100 per cent, SingTel has spent about S$20 billion in recent years buying firms in high-growth Asian countries and in the bigger Australian market.
It now derives about 75 per cent of revenues and two-thirds of pre-tax earnings from operations outside Singapore.
Optus, Australia’s second-largest mobile operator and SingTel’s single-biggest revenue and profit generator, posted a 15 per cent fall in quarterly net profit to A$135 million (US$105 million), as operating revenue rose 3.1 per cent. Ebitda margins were stable at 26 per cent for the third straight quarter despite challenging market conditions.
“Optus continues to show its resilience in a competitive Australian market and is delivering in line with guidance,” outgoing SingTel Chief Executive Lee Hsien Yang said.
The unit, which has a third of the Australian mobile market, has been grappling with cut-throat price competition, ebbing subscriber growth and regulatory changes.
SingTel’s A$14 billion Optus bid in 2001 was its largest and most controversial deal under Lee, who said last July he would leave the group. CFO Chua will take over in April.
The company also owns 21.5 per cent of Thailand’s Advanced Info Service , 44.6 per cent of Globe Telecom in the Philippines, 35 per cent of Indonesia’s PT Telkomsel and 45 per cent of Pacific Bangladesh Telecom.
Pretax profit from its affiliates grew 17 per cent to S$506 million in the quarter, driven mainly by Bharti, but this is down from a 46 per cent rise to S$529 million in the previous quarter.
Some of the associates are seeing slower growth. AIS warned of weak 2006 profits on fierce price competition and political instability, while Globe posted a 39 per cent slump in fourth-quarter profit, hit by higher marketing expenses.
