SingTel – BT

SingTel beats forecasts with 10.4% Q1 profit rise

Telco reports $927m earnings on 10% revenue growth in S’pore operations

Singapore Telecommunications yesterday posted a 10.4 per cent gain in net profit to $927 million for its first quarter ended June 30, boosted by unprecedented double digit growth at home as the resurgent economy led to more mobile phone sales and higher business demand.
The strong performance led to an upward rerating. Revenue from the Singapore business is now expected to see high single digit growth, from the previous low single digit forecast, while capital expenditure to support the increased business is expected to rise at a low double-digit rate rather than the previously forecast single digit rate, SingTel chief executive Chua Sock Koong said at a media presentation of the group’s results.

SingTel’s net profit of $927 million easily beat the $894 million average forecast of four analysts polled by Reuters.

South-east Asia’s largest telco said that group operating revenue for the quarter rose an impressive 11 per cent to $3.57 billion compared to a year ago on the back of a 10 per cent revenue growth from its Singapore operations.

Revenues also got a lift from a stronger Australian dollar, up 7 per cent from a year ago. Optus, the SingTel unit which is the second largest telco in Australia, reported a 3.5 per cent increase in revenues to A$1.9 billion (S$2.4 billion). In Singapore dollar terms, there was an 11 per cent increase.

SingTel’s regional associates continued to deliver spectacular profit growth, with pretax profit up 51 per cent to $652 million.

Ms Chua said: ‘We have made an excellent start to the new financial year, with all our key businesses delivering strong earnings growth.

‘In particular, I am delighted that our Singapore business delivered double-digit increase in revenue, which is unprecedented in recent years. Optus also performed well by maintaining growth and profitability in a highly competitive environment, while our regional mobile associates sustained their stellar growth.’

Growth momentum in the preceding quarters and a stronger domestic economy helped propel SingTel’s domestic mobile and broadband sales. Revenues for corporate data services and IT businesses rose on more business activities.

The Ministry of Trade and Industry last week said it was confident that the economy’s strong first-half momentum – notably the robust 8.6 per cent second-quarter pace – will see it through the year. The 8.6 per cent GDP growth amounts to a blistering 14.4 per cent pace in seasonally adjusted, annualised terms. It is the fastest rate in eight quarters.

SingTel’s data and Internet sales were up 13 per cent to $335 million. Mobile phone sales rose 14 per cent to $317 million as the company added 124,000 new subscribers, of which 108,000 were prepaid customers, reflecting SingTel’s increasing market share among foreign workers.

Overall mobile subscribers rose to 1.92 million giving the company a 39 per cent market share, up one percentage point from a year ago.

Broadband subscriptions increased to 438,000, a gain of 66,000. SingTel’s share of the Internet market was 53.7 per cent, down from 54.1 per cent a year ago.

Its IT or NCS revenue rose 12 per cent to $151 million on the back of higher contribution from systems integration and product resale. NCS order books remain strong, the company said. During the quarter, it clinched a number of government contracts in Qatar, China and Hong Kong. In Singapore NCS continued to win jobs from government agencies.

At Optus, operational Ebitda – earnings before interest, tax, depreciation and amortisation – were stable at A$481 million with operational Ebitda margin down to 25.4 per cent from 26.1 per cent a year ago.

Earnings from SingTel’s regional associates on a post-tax basis increased 29 per cent to $463 million, contributing 53 per cent of the group’s underlying net profit, up from 48 per cent a year ago. Year-on-year the group’s combined mobile subscriber base ballooned 48 per cent to 136 million, the largest in Asia outside China.

Group operating expenses rose 12 per cent to $661 million. Free cash flow for the quarter was up 21 per cent to $556 million.

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