SingTel – BT

SingTel to post exceptional gains for Q3

$118m in realised currency gains to offset $96m in divestment losses

SINGAPORE Telecommunications is set to report net exceptional gains for its third quarter ended Dec 31 as currency translation gains in its Australian unit offset divestment losses in a Taiwanese fixed-line phone company New Century InfoComm Tech Co (NCIC).

The local telco said yesterday that it will register an exceptional realised currency translation gain, net of hedging, of about $118 million for the October-December quarter.

This translation gain arose from SingTel’s wholly owned SingTel Australia Investment Ltd (SAI) paring its Australian dollar denominated share capital by A$323 million after receiving interest paid by Singapore Telecom Australia Investments Pty Ltd.

SAI owns 100 per cent of Singapore Telecom Australia Investments, which in turn owns 100 per cent of SingTel Optus.

The translation gain represents the difference between the amount of share capital returned by SAI and the historical cost of investment in Singapore dollar terms to its shareholders.

Including the $84 million translation gain recorded in the first quarter ended June 30, 2007, SingTel’s total exceptional translation gain for the nine months to Dec 31 will add up to some $202 million.

But its third quarter ended Dec 31 will also face an exceptional loss of $96 million after it completed a share swap with Far EasTone Telecommunications Co (FET), in which SingTel agreed to exchange its entire shareholding in loss-making NICI for new FET shares.

SingTel announced yesterday that it has exchanged its 980.32 million shares in NCIC for 160.37 million new FET shares, which represent 3.98 per cent of the issued share capital of FET. The share swap agreement with FET was made on Aug 15.

On Dec 28, the market value of these new FET shares on the Taiwan Stock Exchange Corporation was NT$6.6 billion (S$294 million), net of transaction costs, based on the closing market price of NT$41.30 per share.

This was lower than the unaudited consolidated carrying value of the NCIC shares at $390 million based on the historical exchange rate, hence resulting in a disposal loss of $96 million. This includes $94 million from the release of foreign currency translation losses previously taken to reserves.

For the first half of this year, SingTel’s net profit rose 6.6 per cent year-on-year to $1.9 billion on the back of a 10.7 per cent gain in operating revenue to $7.3 billion.

The telco, which gets 74 per cent of its earnings from outside Singapore, benefited from the stronger Australian dollar and Indian rupee.

Its profit for the second quarter to Sept 30, which rose 3.3 per cent to $988 million, also received a lift from foreign currency gains.

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