Singapore Telecom net profit rises 5.7%

Singapore Telecom net profit rises 5.7%

Andrea Tan, Bloomberg, Singapore

Singapore Telecommunications Ltd., Southeast Asia's largest telephone company, posted an unexpected gain in fiscal second- quarter profit after signing up more users in India and Indonesia.

Net income rose 5.7 percent to S$809 million (US$476 million), or 4.53 Singapore cents a share, in the three months ended Sept. 30, from S$766 million, or 4.33 Singapore cents, a year earlier, the company said today. The median estimate of six analysts surveyed by Bloomberg News was for profit to decline 4 percent. Sales at SingTel, as the company is known, increased 5.8 percent.

Chief Executive Lee Hsien Yang's investment in Asia sustained earnings growth as contributions from Singapore and Australian unit Optus declined. India's Bharti Televentures Ltd., 31 percent owned by SingTel, signed up a record 1.81 million cell-phone users in the second quarter. That's more than the number of SingTel's mobile customers in Singapore.

"SingTel's Indonesian and Indian markets have grown and the market has over-reacted on their Australian operations," said Gabriel Yap, senior dealing director at Phillip Securities Ltd. in Singapore. "Their results were definitely above expectations."

The company's shares fell 1.7 percent to S$2.36 as of 2:04 p.m. in Singapore. The stock has fallen 11 percent in the past three months, compared with a 3.7 percent decline in the benchmark Straits Times Index. SingTel makes up 8 percent of the index and is the biggest stock by value.

Earnings during the quarter were also boosted by a S$53 million foreign-exchange gain after Optus repaid an Australian dollar-denominated inter-company loan.

Sales in the second quarter rose to S$3.3 billion from S$3.12 billion, the company said in a statement to the Singapore stock exchange.

Revenue for the year ending March 31 will be "roughly the same" as the previous year, SingTel said. The company posted sales of S$12.62 billion in the last fiscal year. SingTel said it expects operating earnings before interest, tax, depreciation and amortization, or EBITDA, to decline.

The company reiterated it may not meet a double-digit growth target for underlying earnings this fiscal year.

"While the group may not achieve double-digit growth in underlying earnings for the current financial year, this remains the objective in the medium term," SingTel said in the statement.

Chief Executive Lee had said in September that meeting the target this year might be difficult.

SingTel's underlying profit, or net income before one-time gains and exchange differences on its loan to Optus, rose 2.7 percent to S$755 million, the company said.

SingTel's overseas businesses accounted for 74 percent of sales in the second quarter, SingTel said. Associated companies contributed S$268 million in profit in the quarter, up 2.5 percent from a year earlier. Pretax profits from associated companies rose 16 percent to S$371 million.

Profit from Asia outside of Singapore and Australia will sustain "double-digit" growth next fiscal year, Lee said.

Dividends from associates rose to S$415 million in the first half from S$232 million a year earlier, because of earlier payments from Telkomsel, SingTel said.

"SingTel is uniquely positioned in the region," Lee said in the statement. "Regional mobile is delivering strong and profitable growth, driven by Bharti and PT Telekomunikasi Selular."