SingTel profits to surge after regional expansion

SingTel profits to surge after regional expansion

Agence France-Presse, Singapore

Singapore Telecommunication (SingTel) expansion into the Asia- Pacific has built a strong platform for short-term growth, analysts said following the company's first half profit surge.

SingTel announced last week its net profit for the six months to September was a record S$1.67 billion (US$960 million), higher than the S$1.4 billion it earned for the entire year to March.

In the second quarter to September, net profit rose almost 14 percent from a year earlier to S$473 millions, at the upper end of analysts' forecasts of 400-S$477 million.

While the interim profit was boosted by SingTel's sale of postal unit SingPost and of local business directory business Yellow Pages, the figures also emphasized the company's positive outlook outside of Singapore, analysts said.

Operating revenue from SingTel's overseas operations grew 47.9 percent to S$3.76 billion in the half-year to September, which helped to offset a decline of 13.9 percent to S$2.05 billion.

Overseas operations now contribute 73 percent to SingTel's revenue.

The jump in overseas revenues has been partly driven by its wholly owned Australian unit Optus, which returned to the black in the half.

Strong contributions from regional associates Globe Telecom of the Philippines, Thailand's Advanced Info Service, Indonesia's Telkomsel and Bharti of India also helped, they said.

"Basically Optus and the regional associates... they have been growing phenomenally," said DBS Vickers Securities telecom analyst Himanshu Chaturvedi.

"As far as I see it, they are going to have a record year of earnings."

Barclays Capital's telecom analyst Lloyd Ong was equally optimistic.

"What was really encouraging was the operations of the business. It's very healthy and very robust," Ong said.

"It's a very solid result and broad-based."

SingTel president and chief executive Lee Hsien Yang pointed to an expansion of its regional operations in a press conference last week.

"We could be looking at new countries. It could be both mobile and other businesses," Lee said.

"Our international investments continue to perform strongly... our regional mobile businesses are growing in terms of profits as well as dividends."

Particularly gratifying for SingTel was Optus' improved performances, turning in a net profit of A$190 million ($134.8 million) in the first-half against a A$76 million loss a year ago.

SingTel was widely criticized two years ago when it bought the Australian telecoms firm for S$13 billion, with some analysts deeming the price tag as too expensive.

SingTel, majority-owned by the Singapore government, acquired Optus and equity stakes in regional telecom companies to reduce its reliance on its home market where liberalisation since 2000 has seen the carrier's dominance gradually eroded.

SingTel is still the city-state's biggest telecommunications service provider but domestic income has declined amid fierce competition from StarHub and Mobile One in Singapore's small market of four million people.

SingTel has also undergone major structural changes in Singapore as it hives off non-core assets to focus more on its telecommunications.

SingTel made a one-time gain of S$545 million after disposing of 69 percent of SingPost in a public listing and S$160 million from the Yellow Pages sale.