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SingTel reports 7% rise in net profit in fiscal first-quarter

14 Aug 2013

Southeast Asia’s largest telecommunications group by subscribers and revenue Singapore Telecom (SingTel) has reported a 7% year-on-year rise in net profit to SGD1.01 billion (USD797 million) for the three months ended 30 June 2013, aided by cost-cutting measures, higher EBITDA, improved contributions from regional mobile associates, and the positive impact of a strategic initiative implemented last year. In May 2012 the carrier put in place a transformation strategy, including SGD2 billion in funding over the next three years, to shore up its business via measures such as acquisitions in the digital space. However, the Group also reported that its Ozzie business SingTel Optus continues to struggle in the face of a weakening Australian dollar.

SingTel booked revenue of SGD4.29 billion in April-June, down 5.3% on the corresponding period a year ago, reflecting it said ‘a more cautious business environment and a slowdown in the Australian mobile market’. EBITDA rose 4.3% to SGD1.30 billion, as expenses fell 9% y-o-y. Selling and administrative expenses, the largest expense category, declined 11% over the same period. Underlying net profit (defined as net income before exceptional items and exchange differences on capital reduction of certain overseas subsidiaries) increased from SGD850 million to SGD897 million, and free cash flow improved by 23.1% y-o-y to SGD893 million.

The Group and its regional mobile associates continued to register strong customer growth in the quarter. The combined mobile customer base was up 6% y-o-y, or 28.1 million, to 477 million as at 30 June. Commenting on the results, SingTel Group CEO, Ms Chua Sock Koong, said: ‘It was a strong quarter. We continue to make progress in strengthening our high performance core business and create next generation growth engines in the digital space. We made good strides in our transformational initiatives, improving yield and capturing value from increased data usage trends’. She went on to say that the Group’s regional mobile associates ‘have continued to perform well. We are also pleased to see some pricing discipline returning to the Indian mobile market and are optimistic that Airtel , as the market leader, is positioned to benefit from this’. However, SingTel notes that whilst Optus posted an 8% increase in net profit to AUD167 million (USD152 million) and a 5.3% dip in revenue to AUD2.2 billion in the period under review, the weakness of the Australian dollar could hit Optus in the current quarter. The weakening currency means that SingTel has revised downwards its Group outlook. It now expects consolidated revenue to decline by a ‘mid-single digit level’ and EBITDA to drop at a ‘low single digit level’. SingTel had previously forecasted ‘stable’ sales.

Singapore, Bharti Airtel, Optus, Singtel Group

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