SingTel’s second-quarter net income drops on India and Indonesia

11 Nov 2010

Southeast Asia’s largest telecommunications firm Singapore Telecommunications (SingTel) has posted lower-than-expected profits for its fiscal second quarter ended 30 September 2010, as acquisition costs related to Indian affiliate Bharti Airtel’s African expansion weighed the company down. SingTel reported Q2 net profit of SGD892 million (USD692 million), down 6.7% from SGD956 million a year ago, and below market forecasts of profit of SGD960.5 million – in a poll conducted by Reuters. Group earnings were reportedly impacted by costs associated with Bharti’s June acquisition of the African assets of Kuwait-based Zain Group, in a deal valued at USD10.7 billion, as well as by investments in multimedia services in its home market, Singapore. Nevertheless, investors were cheered by SingTel’s decision to raise its dividend payout ratio to 55%-70% of underlying net profit, from 45%-60% previously.

SingTel, 54%-owned by Singapore state-investment company Temasek Holdings Ltd, booked quarterly revenue of SGD4.43 billion, up 8.1% from SGD4.10 billion in 2Q09, bolstered by growth from its Singapore and Australia operations. The group also holds significant stakes in six regional mobile operators: Bharti Airtel, Telkomsel of Indonesia, Thailand’s AIS, Pakistan’s Warid Telecom, the Philippines’ Globe Telecom and Pacific Bangladesh Telecom Limited. Pre-tax profit derived from SingTel’s regional affiliates fell 6% from a year earlier to SGD536 million, with Bharti’s contribution down 11.5% y-o-y to SGD209 million as a result of the aforementioned Zain acquisition. In Indonesia, Telkomsel’s contribution fell 8.8% to SGD230 million as it was hit by ‘aggressive price competition and promotions’ along with higher operating expenses and depreciation charges toward network upgrades and expansion, SingTel said.

Singapore, Singtel Group