SingTel – BT

SingTel pumps US$75m into Warid

Its shareholding in its Pakistani unit will remain at 30%

SINGAPORE Telecommunications (SingTel) has given Warid Telecom an additional capital injection of US$75 million to take its total investment in the Pakistani operator to US$833 million.

The latest capital boost came from the subscription to SingTel’s entitlement of 174.89 million Warid shares for US$75 million in cash.

Warid is expected to use this amount to fund the expansion of its domestic cellular network.

SingTel said the transaction will not have a material impact on its performance for the financial year ending March 31.

The operator bought its 30 per cent stake in Warid in 2007 for US$758 million as part of its strategy to branch into under-developed telecommunications markets around the world.

Warid is currently Pakistan’s third-largest mobile operator with a market share of around 18.8 per cent.

Despite its capital injection, SingTel’s shareholding in its Pakistani unit will stay at 30 per cent as Warid’s other shareholder, the Abu Dhabi Group, has also raised its stake significantly.

According to a Warid statement released on Wednesday, its two shareholders had recently pumped a total of US$250 million in equity into the firm.

Warid had suffered a wider-than-expected pre-tax loss of S$41 million for the three months ended Sept 30, 2008. Its underperformance, coupled with plunging regional currencies, dragged SingTel’s second-quarter net profit to a three-year quarterly low of S$868 million.

SingTel derives nearly 60 per cent of its earnings from overseas through wholly owned Australian operator Optus, along with regional associates Warid, Bharti Telecom, Telkomsel, Globe Telecom, Pacific Bangladesh Telecom and AIS.

While its foreign ventures have been the bane of its recent financial performance, some industry watchers believe the tide is finally turning in SingTel’s favour. The company’s share price has rallied as a result, rising 7 per cent in the past week to close at S$2.76 yesterday.

‘A collection of emerging market telcos, SingTel should benefit from a recovery in the currencies under which its key overseas units operate and receding aversion towards this asset class,’ CIMB said in a recent research note.

‘Also, the worst of competition in Indonesia appears to be behind Telkomsel. Bharti continues to gain market share,’ the research firm added.

SingTel will release its third-quarter results on Feb 10.

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