SingTel's first quarter profit rises 14 percent
SingTel's first quarter profit rises 14 percent
Bloomberg, Singapore
Singapore Telecommunications Ltd. (SingTel), Southeast Asia's
largest phone company, had its biggest profit increase in three
quarters after attracting more mobile phone users in India and
Indonesia.
Net income climbed 14 percent to S$796 million (US$482
million) for the three months ended June 30 from S$700.2 million
a year earlier, the company said on Thursday in a statement.
Sales for SingTel rose 6.3 percent to S$3.21 billion.
Chief Executive Lee Hsien Yang, 47, has spent about $11.5
billion on overseas investments in the past four years as growth
slows in Singapore, a city with a population of four million.
Bharti Televentures Ltd. in India, PT Telekomunikasi Selular
(Telkomsel) in Indonesia and cell phone units in Thailand and the
Philippines accounted for almost half of SingTel's earnings
before tax in the quarter.
"We've been quite happy with the reliance on its regional
mobile associates," said Jason McCay, who helps manage $1.7
billion of assets in Asia, including SingTel shares, at Martin
Currie Investment Management Ltd. in Edinburgh. "We like the
stock. It's a high cash flow generator and the company manages
its capital well."
The company's shares declined 5 cents, or 1.8 percent, to
S$2.77 as of 3:18 p.m. Singapore time. Until Wednesday, the stock
had risen 19 percent this year, compared with a 15 percent
advance in the benchmark Straits Times Index. Profit was in line
with the S$795 million median estimate of five analysts surveyed
by Bloomberg News.
Margins for earnings before interest, tax, depreciation and
amortization in Singapore and Australia narrowed in the first
quarter because of increased competition.
"The shares are over-reacting to the weaker margins in
Singapore and Australia," said Stanley Tan, a Singapore-based
analyst at DBS Vickers Securities, who has a "buy" rating on the
stock. "Fundamentally, SingTel is still a solid company and shows
continued resilience in Singapore and Australia."
In Singapore, a $1.5 billion market in which more than 95
percent of the population owns a mobile phone, SingTel competes
with smaller rivals StarHub Ltd. and MobileOne Ltd. The company's
regional units give it access to 1.6 billion people.
SingTel's overseas businesses accounted for 75 percent of
sales in the first quarter, the company said on Thursday.
The company's four regional mobile phone units earned S$355
million in pretax profit, up 30 percent from a year earlier.
Profit from associated companies contributed S$376 million in
pretax earnings in the quarter, up 27 percent from a year
earlier.
SingTel also has stakes in Advanced Info Service Pcl, the
biggest mobile-phone operator in Thailand, and Pacific Bangladesh
Telecom Ltd., which it bought on June 2 for $118 million.
SingTel had 71.1 million mobile-phone users in seven countries
from Australia to Thailand, up 9.7 percent from the three months
ended March 31, its biggest quarterly increase.
In Singapore, sales of traditional fixed-line phone services
fell 6.6 percent and international calling dropped 9.7 percent.
Sales of data and Internet services rose 0.7 percent to S$278
million, the company said.
The average monthly mobile bill for users was S$55 in the
first quarter from S$54 in the fourth quarter and a year ago.
Revenue from mobile services was unchanged at S$207 million.