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SingTel's Q3 Rides Emerging Markets

Light Reading
News Analysis
Light Reading
2/5/2008

Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), Southeast Asia's largest telco, beat expectations with its fiscal third quarter results as its emerging markets investments accounted for more than half of its underlying net profit. (See SingTel Reports Q3.)

Singapore's incumbent fixed and mobile operator saw group revenues rise 11 percent to S$3.83 billion (US$2.71 billion) during the quarter ended December 31. Around 75 percent of those revenues came from operations outside Singapore.

Net income dropped by 4.2 percent to S$952 million ($672.84 million), which the carrier says was due to exceptional gains on property disposal in the year-ago quarter that skewed the figures and foreign exchange losses following a share swap with Taiwan's Far EasTone Telecommunications Co. Ltd. during the third quarter.

Underlying net profit, excluding exceptional items, was 22 percent higher at S$931 million ($658 million) -- ahead of the S$918.8 million (649.38 million) forecast by analysts.

Shares in SingTel rose $0.04 (1.04%) to $3.90 on the Singapore exchange Tuesday.

In its domestic market, SingTel reported mobile revenues increased by 18 percent year on year to S$345 million ($243.84 million) as it added a record 197,000 subscribers.

Data and Internet revenues grew by 7.7 percent to S$351 million ($248.07 million) on the back of corporate data demand and broadband growth including its mio TV service, which SingTel hopes will stimulate its fixed-line business. The carrier had 27,000 IPTV subscribers at the end of the quarter.

SingTel has invested heavily in operations outside Singapore, where the market of 4.7 million people is saturated.

Its SingTel Optus Pty. Ltd. subsidiary is the second largest service provider in Australia. It also holds minority stakes in six mobile operators across Asia/Pacific: PT Telekomunikasi Selular (Telkomsel) in Indonesia, India's Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Globe Telecom Inc. in the Philippines, Advanced Info Service plc (AIS) in Thailand, Pacific Bangladesh Telecom Ltd. in Bangladesh, and Warid Telecom Pvt. Ltd. in Pakistan.

Warid is its newest investment -- the carrier closed the acquisition of a 30 percent stake in the company in September. (See SingTel Buys Warid Stake .)

Earnings from those six mobile operators grew 34 percent year on year to S$492 million ($347.73 million) and accounted for 53 percent of SingTel's underlying net profit during the third quarter.

SingTel boasted a combined mobile subscriber base of 171.54 million at the end of December, of which just 2.33 million were in Singapore. Bharti made the largest contribution with 55.16 million mobile subscribers, followed by Telkomsel, which had 47.89 million. The total subscriber base grew by 53 percent from 112.28 million at the end of 2006. (See SingTel Boasts 172M Subs.)

CEO Chua Sock Koong said on an analyst conference call that SingTel is still looking for acquisitions in Asia, adding, "we have a fair amount of flexibility in our financial position." The company's free cash flow doubled from a year ago to close the quarter at S$962 million.

The carrier is also looking into expansion in Central Asia, the Middle East, and Africa, where executives today said it's abandoned a bid for a 51 percent majority stake in Ghana Telecom .

— Nicole Willing, Reporter, Light Reading

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