SingTel's fiscal second-quarter income dragged down by regional associates

10 Nov 2011

Southeast Asia’s leading telecommunications group by revenue and subscribers, Singapore Telecommunications Ltd (SingTel), says that a weaker contribution from its regional associates dragged down its net profit for the fiscal second-quarter ended 30 September 2011, but reaffirmed its policy of seeking to increase its equity stake in overseas operations. ‘If stakes are available … we would definitely be willing to look at it. It is our long-term intent to raise our stake in our associates,’ the group’s chief executive officer Chua Sock Koong confirmed at a press briefing.

In a filing with the Singapore Stock Exchange, SingTel said that operating revenue climbed 3.9% year-on-year to SGD4.61 billion (USD3.61 billion) in the three months to 30 September, but net profits of SGD882 million were down from SGD892 million in the corresponding period of 2010, and below a market forecast of SGD894.7 million in a Dow Jones Newswires’ poll. The Singapore-based telco said the principal drag on its profits stemmed from lower pre-tax profits from its six regional associates – India’s Bharti Airtel, Indonesia’s Telkomsel, Thailand’s Advanced Info Service (AIS), Pakistan’s Warid Telecom, the Philippines’ Globe Telecom and Pacific Bangladesh Telecom – which dropped 12.1% year-on-year to SGD471 million.

SingTel controls a 32.3% stake in Bharti Airtel which was the least impressive performer in terms of the group’s associates in the July-September period. Bharti’s contribution plummeted 37% y-o-y to SGD131 million, largely stemming from ongoing losses from the Indian firm’s African operations, and a 9.1% fall in the value of the Indian rupee against the Singapore dollar. In Indonesia, Telkomsel’s contribution inched up 1.4% to SGD233 million – again impacted by a 6.3% fall in the Indonesian rupiah versus the dollar – although AIS in Thailand contributed SGD78 million, up 17.3%, despite a 5.6% drop in the Thai baht.

TeleGeography notes that the group’s financial performance over the past few quarters has been hit by slowing growth from its regional mobile assets, on top of which it is struggling to develop its position in two saturated, mature markets – Singapore and Australia. Nevertheless, the group’s mobile base continues to grow, increasing by 56 million, or 15% in the year to 30 September 2011. At that date SingTel and its associates in Asia (and Bharti’s assets in Africa) had nearly 424 million mobile subscribers, up from about 386 million a year earlier. The Indian operator is the biggest single associate, with 227 million mobile users in 3Q11, including 48.4 million in Africa.

Singapore, Bharti Airtel, Singtel Group